| Mon 8 Mar 2004, 8:42 | | Sasol interim results for 6 months ended 31 Dec 03 |
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SASOL LIMITED - REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL REPORT AND
DECLARATION OF DIVIDEND NUMBER 49 FOR THE SIX MONTHS ENDED
31 DECEMBER 2003
SASOL LIMITED
Company registration number: 1979/003231/06
Incorporated in the Republic of South Africa
Share code: JSE-SOL NYSE-SSL
ISIN: ZAE 000006896
Reviewed condensed consolidated interim financial report and declaration of
dividend number 49 for the six months ended 31 December 2003
Comprehensive additional information is available on our website at:
www.sasol.com
- Severe adverse impact of stronger rand
- Chemical margins remain weak
- Good operational performance
- Capital projects successfully advanced
- Better second half expected, signalling new growth phase
31 Dec 31 Dec 31 Dec 31 Dec
2002 2003 2003 2002
Turnover Operating profit
R million Businesss unit R million
513 432 Mining 521 701
556 649 Synfuels 2 207 4 572
10 667 10 115 Oil and Gas 841 995
21 175 18 382 Chemical businesses 525 1 355
9 552 8 349 O&S (38) 154
3 150 3 040 Polymers 244 428
3 281 2 812 Solvents 87 382
2 472 2 012 Wax 97 31
2 258 1 835 Nitro 52 237
462 334 Other chemicals 83 123
108 288 Other businesses (115) (373)
33 019 29 866 3 979 7 250
Balance sheet at
31 Dec 31 Dec 30 June
2003 2002 2003
Reviewed Reviewed Audited
Restated
Rm Rm Rm
Assets
Property, plant and equipment 44 325 40 405 42 363
Goodwill and negative goodwill (50) (365) (314)
Other long-term assets 4 649 4 110 4 473
Current assets 21 711 22 544 23 097
Total assets 70 635 66 694 69 619
Equity and liabilities
Shareholders" equity 33 454 33 446 33 518
Minority interest 262 276 300
Total equity 33 716 33 722 33 818
Long-term debt 6 390 4 859 4 581
Long-term provisions and
obligations 5 082 5 309 5 075
Other non-current liabilities 6 162 5 884 6 209
Short-term debt 6 467 6 003 6 481
Other current liabilities 12 818 10 917 13 455
Total liabilities 36 919 32 972 35 801
Total equity and liabilities 70 635 66 694 69 619
Income statement for the six months ended
31 Dec 31 Dec 30 June
2003 2002 2003
Reviewed Reviewed Audited
Restated
Rm Rm Rm
Turnover 29 866 33 019 64 555
Cost of sales and services rendered (19 692) (18 716) (39 347)
Gross profit 10 174 14 303 25 208
Other operating expenditure (5 594) (6 079) (11 589)
Translation losses (601) (974) (1 708)
Operating profit 3 979 7 250 11 911
Dividends and interest received 105 93 167
Income from associates 34 30 60
Borrowing costs (137) (74) (225)
Net income before tax 3 981 7 299 11 913
Taxation (1 454) (2 352) (4 007)
Net income after tax 2 527 4 947 7 906
Minority interest (41) (93) (89)
Attributable earnings 2 486 4 854 7 817
Earnings per share (cents)
- attributable earnings basis 408 797 1 283
- headline earnings basis 397 797 1 280
Diluted earnings per share (cents)
- attributable earnings basis 404 783 1 262
- headline earnings basis 393 783 1 259
Dividends per share (cents)
- interim 215 215 215
- final 235
changes in equity statement for the six months ended
31 Dec 31 Dec 30 June
2003 2002 2003
Reviewed Reviewed Audited
Restated
Rm Rm Rm
Opening balance 30 070 30 070
Effect of change in accounting policy 1 245 1 245
Restated opening balance 33 518 31 315 31 315
Shares issued 60 57 77
Shares purchased (33) (112) (185)
Attributable earnings 2 486 4 854 7 817
Dividends paid (1 431) (1 524) (2 835)
Decrease in foreign currency
translation reserve (1 022) (1 143) (2 570)
Decrease in cash flow hedge
accounting reserve (124) (1) (101)
Closing balance 33 454 33 446 33 518
Comprising
Share capital 2 843 2 763 2 783
Share buyback programme (3 647) (3 541) (3 614)
Accumulated earnings 36 096 33 389 35 041
Foreign currency translation
reserve (1 374) 1 075 (352)
Non-trading financial assets
reserve 2 2 2
Cash flow hedge accounting reserve (466) (242) (342)
Shareholders" equity 33 454 33 446 33 518
cash flow statement for the six months ended
31 Dec 31 Dec 30 June
2003 2002 2003
Reviewed Reviewed Audited
Restated
Rm Rm Rm
Cash generated by operating
activities 6 929 7 836 15 997
Investment income 134 103 178
Borrowing costs paid (737) (529) (1 286)
Dividends paid (1 431) (1 524) (2 835)
Tax paid (1 841) (4 164) (5 527)
Cash retained from operating
activities 3 054 1 722 6 527
Additions to property, plant
and equipment (4 515) (5 377) (10 272)
Acquisition of businesses (323) (145) (155)
Other net expenditure in investing
activities (245) (693) (294)
Cash utilised in investing
activities (5 083) (6 215) (10 721)
Share capital issued 60 57 77
Share buyback programme (33) (112) (185)
Dividends paid to minority
shareholders (26) (64) (65)
Increase in debt 1 877 3 748 3 210
Cash effect of financing activities 1 878 3 629 3 037
Decrease in cash and cash
equivalents (151) (864) (1 157)
Cash and cash equivalents
- opening balance 583 1 995 1 995
- arising on translation (76) (412) (255)
Cash and cash equivalents 356 719 583
Comprising
- cash 2 761 2 484 3 186
- cash restricted for use 338 731 665
- bank overdraft (2 743) (2 496) (3 268)
356 719 583
salient features
31 Dec 31 Dec 30 June
2003 2002 2003
number number number
of shares of shares of shares
Share statistics million million million
Total shares in issue 670,2 668,2 668,8
Treasury shares (share buyback
programme) 60,1 58,9 59,7
Weighted average number of shares 609,4 609,3 609,3
Fully diluted shares 616,0 620,3 619,6
Significant financial information Rm Rm Rm
Total debt (including bank overdraft)
- interest bearing 15 543 13 310 14 277
- non-interest bearing 57 48 53
Capital commitments
- authorised and contracted 7 979 7 204 9 562
- authorised, not yet contracted 16 961 11 496 8 510
Guarantees and contingent
liabilities
- total guarantees 17 851 11 116 16 313
- reflected as liabilities 7 487 3 967 5 155
Significant items in
operating profit
- employee costs 4 467 4 447 9 055
- depreciation of property,
plant and equipment 2 207 2 023 4 468
Borrowing costs capitalised 600 455 1 061
Effective tax rate (%) 36,5 32,2 33,6
Number of employees 30 800 31 100 31 150
Net asset value per share (cents) 5 484 5 489 5 503
Reconciliation of headline earnings Rm Rm Rm
Attributable earnings 2 486 4 854 7 817
Impairment of assets 109 203 83
(Profit)/loss on disposal
of assets (68) (90) 159
Amortisation of goodwill 9 13 42
Amortisation of negative
goodwill (112) (123) (301)
Tax effect on reconciling items (4) 2 (2)
Headline earnings 2 420 4 859 7 798
The reader is referred to the definitions contained in the 30 June 2003 annual
financial statements. Please note: A billion is defined as one thousand
million.
Forward-looking statement: In this report we make certain statements that are
not historical facts and relate to analyses and other information based on
forecasts of future results and estimates of amounts not yet determinable,
relating, amongst other things, to volume growth, increases in market share,
total shareholder return and cost reductions. These are forward-looking
statements as defined in the U.S. Private Securities Litigation Reform Act of
1995. Words such as "believe", "anticipate", "expect", "intend", "seek", "will",
"plan", "could", "may", "endeavour" and "project" and similar expressions are
intended to identify such forward-looking statements, but are not the exclusive
means of identifying such statements. Forward-looking statements involve
inherent risks and uncertainties and, if one or more of these risks materialise,
or should underlying assumptions prove incorrect, actual results may be very
different from those anticipated.
The factors that could cause our actual results to differ materially from such
forward-looking statements are discussed more fully in our most recent annual
report under the Securities Exchange Act of 1934 on Form 20-F filed on October
27, 2003 and in other filings with the United States Securities and Exchange
Commission.
Stronger rand - lower profits
Profits were substantially reduced by the stronger Rand and margin pressures in
a challenging international environment. From an operational perspective, most
of Sasol"s businesses performed satisfactorily.
The average exchange rate during the six-month period ended 31 December 2003, of
R7,08 : US$1 was 29% stronger than the comparable rate (R10,03 : US$1) of the
previous reporting period. Including the effect of lower translation losses at
the end of the period (R0,6 billion versus R1,0 billion), the net adverse impact
on operating profit of the strong rand amounted to about R3,4 billion. The
associated impact on attributable earnings was R2,4 billion or a decrease of
about 394 cents per share.
Attributable earnings of R2,5 billion was R2,4 billion (49%) below the
comparable result of the previous period. Apart from negative currency effects,
the adverse impact of lower chemical margins and inflationary effects on costs
were partly offset by the benefit of higher average international oil prices
(dated Brent US$28,73 versus US$26,87) and productivity improvements.
Attributable earnings per share of 408 cents was 49% lower than earnings of the
previous comparable reporting period. Headline earnings per share of 397 cents
was 50% lower. In the period under review, impairment charges relating mainly to
non-performing foreign activities of Sasol Nitro and Sasol Wax amounted to R109
million.
Capital expenditure during the reporting period amounted to R4,8 billion.
The main projects advanced were:
- the Mozambique Natural Gas Project - gas reached Secunda, through the 865
kilometre pipeline from the Central Processing Facility in Mozambique, on
schedule during February 2004;
- Project Turbo - the fuels enhancement and polymers expansion project which is
scheduled for commissioning from the last quarter of 2005;
- the Gas-to-Liquid (GTL) fuels projects in Qatar and Nigeria which are
scheduled for start-up in December 2005 and July 2007 respectively;
- the Arya Sasol Polymers joint venture to build a world-scale ethane cracker
and polyethylene plants in Iran, which are scheduled for commissioning from the
fourth quarter of 2005; and
- the Acrylic Acid project which was commissioned during the first quarter of
2004.
Gearing (defined as net debt as a percentage of shareholders" equity) was 38% at
31 December 2003.
The interim dividend declared of 215 cents is the same as the previous year and
represents a dividend cover of 1,9 times.
Sasol Mining
Although production (26 million tons) was the same as in the comparable
reporting period of the previous year, the operating profit of R521 million was
26% lower, mainly because of higher costs and the adverse effect of the strong
Rand more than offsetting the benefit of higher export coal prices.
Sasol Synfuels
The operating profit of R2 207 million was R2 365 million (52%) lower than the
comparable previous six-month period. Substantial adverse currency effects (R2,8
billion) were partly offset by the benefit of higher oil prices. From an
operational perspective, the Secunda complex performed well and a major planned
shutdown was successfully completed.
Sasol Oil and Gas
From July 2003, Sasol Oil was reconfigured to include the tank farm and blending
facilities of Sasol Synfuels, in addition to its previous fuel marketing and
distribution and crude oil refining activities.
The operating profit of R841 million was R154 million (15%) lower than the
previous reporting period after adjusting for the beneficial inclusion of the
Secunda tank farm and blending facilities. This decrease was mainly because of
adverse currency effects. The contribution to operating profit of Sasol Gas
(R197 million) was 39% below the comparable result of the previous reporting
period, primarily because of lower sales volumes and selling prices and once-off
income in the previous reporting period from an asset sale.
On 19 February 2004, it was announced that Sasol and Petroliam Nasional Berhad
(Petronas) had agreed broad principles relating to a merger of equals between
Sasol"s liquid fuels business and Engen Limited, to create a leading South
African liquid fuels business which will also incorporate significant Black
Economic Empowerment shareholding. Further announcements will be made in due
course.
Sasol"s Chemical Businesses
Sasol Nitro
The operating profit of R52 million was 78% below the comparable result of the
previous reporting period. While the explosives business achieved a major and
pleasing turn-around, the fertilizers" business performance was a disappointment
and more than offset the gains in explosives. Late summer rains impacted
severely on fertilizer demand and the phosphates range incurred losses because
of input costs not being recovered in selling prices.
The foreign explosives ventures have not met expectations and are in the process
of being sold. The related impairment charges have been raised.
Sasol Olefins and Surfactants (o&s)
The substantial pressure on margins experienced by this business in the previous
financial year continued. The operating loss of R38 million was R192 million
worse than the previous comparable reporting period, despite expectations that
improvements would be forthcoming.
As was experienced in the previous reporting period, the alkylates business was
a major disappointment with high oil-related (kerosene and benzene) input costs
continuing and not being recovered from customers. The monomers business also
disappointed, primarily because of adverse currency effects impacting on
margins.
Portfolio scrutiny resulted in Sasol Servo being offered for sale because of its
non-core nature and presently a sale transaction is well-advanced. It should be
completed during the remaining months of the financial year. Strategic analysis
of the entire O&S portfolio is continuing and is nearing completion.
Through these difficulties it is important to note that, as part of the drive to
improve performance and increase margins, cash fixed costs have been reduced by
about euro 50 million (13% in real terms) since the business (Condea) was
acquired in 2001.
Sasol Polymers
The operating profit of R244 million was R184 million (43%) below the comparable
result of the previous six-month period. The entire shortfall can be attributed
to the strengthening of the Rand. Productivity initiatives continued and yielded
pleasing results. The division"s integrated investment in ethylene and
polyethylene production in Malaysia performed satisfactorily and met
expectations.
Sasol Solvents
This business was particularly affected by the strong Rand because of its very
high level of exports relative to total turnover. The operating profit of R87
million was 77% below the comparable result of the previous reporting period,
although in euro terms it was close to the previous result. Strict cost
management is a notable feature of this business.
Sasol Wax
The operating profit of R97 million was R66 million above the result of the
previous reporting period, mainly due to a gain of R34 million realised on the
disposal of an asset in the USA, improved margins in South Africa and the
benefits of the newly acquired wax emulsion business in Europe, partly reduced
by adverse currency effects. Margins in Europe were pressurised by low-price
Chinese and Russian imports.
The poor performance of certain investments in Venezuela and the USA and careful
scrutiny of their future potential, led to a decision to dispose of them and
impairment charges on the investment in the former arose as a result. Strategic
evaluation of the business in Europe is underway and joint-venturing
opportunities to bolster performance are being considered.
Effective tax rate
The increase in the effective tax rate from 32,3% to 36,5% is mainly a result of
the effect of an increased STC charge relative to earnings, deferred tax assets
written off and translation losses on integrated foreign operations which are
not subject to tax.
Foreign currency translation reserve
Losses of R1 022 million arising from the conversion to Rand of the net assets
of foreign entities such as Sasol Wax, Sasol Chemie and Merisol are recognised
in the changes in equity statement as a foreign currency translation reserve.
The movement in the current year is primarily attributable to the strengthening
of the Rand against both the euro and the US dollar.
Capital commitments
Significant approved capital projects totalling R25 billion of which R8 billion
has been contracted for include:
- Project Turbo - the fuels enhancement and polymers expansion project;
- the Mozambique Natural Gas Project ;
- GTL projects in Nigeria and Qatar; and
- the Arya Sasol Polymers joint venture
Net Asset value per share
The decrease in net asset value per share from 5 503 to 5 484 cents is mainly as
a result of the losses arising on conversion to Rand of the net assets of
foreign entities and the increase in total debt.
Profit outlook
The prevailing volatility of the Rand continues to make forecasting difficult.
While relatively high oil prices are expected to continue and certain
international chemical prices have strengthened, it remains likely that earnings
for the full financial year will be substantially lower than the previous year.
It is anticipated, however, that earnings in the second half-year will be better
than the first six months.
The adverse influence of the strong Rand is expected to be less severe in the
second six months and a major cost reduction initiative across all businesses is
expected to yield significant benefit relative to the first half of the
financial year.
Basis of preparation and accounting policies
The condensed consolidated interim financial report for the six months ended 31
December 2003 has been prepared in compliance with the Listings Requirements of
the JSE Securities Exchange, South Africa, International Financial Reporting
Standards and the South African Companies Act, 1973, as amended.
The accounting policies applied in the presentation of the interim financial
report are consistent with those applied for the year ended 30 June 2003.
Comparative figures for the six months to 31 December 2002 have been restated to
take into account the change in the accounting policy on borrowing costs and
change in accounting treatment of revenue as reported in the 30 June 2003 annual
financial statements.
Related party transactions
The group, in the ordinary course of business, enters into various sale and
purchase transactions on an arm"s length basis at market rates with related
parties.
Acquisition of businesses
During the period, Sasol acquired a 50% share in Sasol-Huntsman Verwaltungs GmbH
from RWE-DEA and the remaining 48% interest in G.D. Portbury Limited (Dubai).
Post-balance sheet date events
With effect from 1 January 2004 Sasol acquired Naledi Petroleum Holdings (Pty)
Limited, the holding company of Exel Petroleum (Pty) Limited.
On 19 February 2004, it was announced that Sasol and Petroliam Nasional Berhad
(Petronas) had agreed broad principles relating to a merger of equals between
Sasol"s liquid fuels business and Engen Limited, to create a leading South
African liquid fuels business. Further announcements will be made in due course.
principal foreign currency conversion rates
One unit of foreign
currency equals 31 Dec 03 31 Dec 02 30 June 03
Rand:US$ -closing 6,69 8,57 7,50
Rand:US$ -average 7,08 10,03 9,03
Rand:euro -closing 8,42 9,00 8,63
Rand:euro -average 8,18 9,95 9,41
Independent review by the auditors
The condensed consolidated balance sheet at 31 December 2003 and the related
condensed consolidated statements of income, changes in equity and cash flow for
the six months then ended have been reviewed by our auditors, KPMG Inc. Their
unmodified review report is available for inspection at the registered office of
the company.
Declaration of interim dividend number 49
The directors of Sasol Limited have declared an interim dividend of 215 cents
per share (2002: 215 cents per share) for the half-year to 31 December 2003. The
dividend has been declared in the currency of the Republic of South Africa.
In accordance with the settlement procedures of STRATE, the following dates will
apply to the interim dividend:
Last day for trading to qualify for and participate in the interim dividend
(cum dividend) Thursday, 1 April 2004
Trading ex dividend commences Friday, 2 April 2004
Record date Thursday, 8 April 2004
Dividend payment date
(electronic and certificated register) Tuesday, 13 April 2004
Dividend cheques in payment of this dividend to certificated shareholders will
be posted to shareholders on or about Tuesday, 13 April 2004. Electronic payment
to certificated shareholders will be undertaken simultaneously. Shareholders who
have dematerialised their share certificates will have their accounts at their
Central Securities Depository Participant or Broker credited on Tuesday, 13
April 2004.
In the case of certificated shareholders, notice of any change of address of
shareholders must reach the transfer secretaries, Computershare Limited, on or
before Thursday, 8 April 2004. Share certificates may not be dematerialised or
rematerialised between Friday, 2 April 2004 and Thursday, 8 April 2004, both
days inclusive.
Dividends payable to US shareholders
We believe that Sasol Limited is a "qualified foreign corporation" in terms of
the US Jobs and Growth Tax Relief Reconciliation Act of 2003 ("the Act"). It
therefore follows that dividends paid by Sasol Limited to US individual
shareholders are eligible to be taxed at a maximum rate of 15% as permitted
under the Act. We recommend that you consult your US tax advisor in this
regard.
On behalf of the board
P du P Kruger
Chairman
P V Cox
Deputy chairman & chief executive
Sasol Limited
8 March 2004
Registered office: Sasol Limited, 1 Sturdee Avenue, Rosebank, Johannesburg 2196
P O Box 5486, Johannesburg 2000
Transfer Secretaries: Computershare Limited, 70 Marshall Street, Johannesburg
2001
P O Box 61051, Marshalltown 2107, South Africa Tel: +27 11 370-5000 Fax: +27
11 370-5271/2
Directors: P du P Kruger (Chairman), P V Cox (Deputy chairman and chief
executive), E le R Bradley, W A M Clewlow, B P Connellan, L P A Davies
(Executive director), J H Fourie, M S V Gantsho, A Jain (Indian), S Montsi, T S
Munday (Executive director), S B Pfeiffer (US) , J E Schrempp (German), C B
Strauss
Company secretary: N L Joubert
Company registration number: 1979/003231/06
Incorporated in the Republic of South Africa
American Depositary Receipt ("ADR") program: cusip number 543210 ADR to ordinary
share 1:1
Depositary: The Bank of New York, 22nd floor, 101 Barclay Street, New York, N.Y.
10286, U.S.A.
information agent: Taylor Rafferty.
www.sasol.com
email: investor.relations@sasol.com
Date: 08/03/2004 07:00:13 AM Produced by the JSE SENS Department
