| Tue 7 Sep 2004, 8:42 | | Audited group results and declaration of dividend |
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Sasol Limited - Audited group results and declaration of dividend number 50 of
Sasol Limited for the year ended 30 June 2004
Sasol Limited
(Incorporated in the Republic of South Africa)
(Registration number 1979/003231/06)
(ISIN: ZAE000006896)
Share codes: JSE - SOL
NYSE - SSL
(`Sasol`)
Audited group results and declaration of dividend number 50 of Sasol Limited for
the year ended 30 June 2004
Benefit of higher oil prices
Adverse impact of stronger rand substantially reduces rand attributable earnings
Attributable earnings per share expressed in US dollars equal to previous year
Capital projects successfully advanced
Significant improvement in second half of year - further earnings growth
anticipated
Dividend maintained
Strategic growth drivers
Grow a global gas-to-liquids (GTL) business
Grow our chemicals portfolio
Exploit upstream hydrocarbon opportunities
2003 2004 2004 2003
Turnover Operating profit
R million Business unit analysis R million
1 013 1 083 Mining 1 177 1 277
1 210 1 329 Synfuels 5 515 7 418
19 460 18 554 Liquid fuels business 1 429 1 402
1 480 1 389 Gas 387 451
7 7 Synfuels international (138) (180)
19 543 17 133 Olefins & Surfactants (46) 67
6 245 6 576 Polymers 971 890
5 950 5 956 Solvents 135 436
9 647 8 124 Other (89) 392
64 555 60 151 9 341 12 153
Effect of capital items (27) (242)
9 314 11 911
Geographic analysis
31 136 28 954 South Africa 7 932 10 896
1 959 3 062 Rest of Africa 204 15
17 149 15 632 Europe 1 164 781
3 710 3 509 Middle East, India, Far East 277 453
8 809 7 060 North America (303) (229)
697 723 South America 4 7
1 095 1 211 Southeast Asia 36 (12)
64 555 60 151 9 314 11 911
Balance sheet
at 30 June
2003 2004 2004 2003
US$m US$m Rm Rm
ASSETS
5 652 7 545 Property, plant and equipment 46 858 42 363
Goodwill and negative
(42) 15 goodwill 92 (314)
274 360 Intangible assets 2 236 2 051
Post-retirement benefit
60 39 assets 239 451
26 49 Deferred tax assets 306 194
237 302 Other long-term assets 1 877 1 777
6 207 8 310 Non-current assets 51 608 46 522
1 167 1 335 Inventories 8 292 8 748
1 399 1 767 Trade and other receivables 10 971 10 486
2 4 Short-term financial assets 25 12
89 85 Restricted cash 527 665
425 332 Cash 2 063 3 186
3 082 3 523 Current assets 21 878 23 097
9 289 11 833 TOTAL ASSETS 73 486 69 619
EQUITY AND LIABILITIES
4 472 5 640 Shareholders` equity 35 027 33 518
40 60 Minority interest 373 300
611 1 467 Long-term debt 9 110 4 581
332 380 Long-term provisions 2 362 2 486
Post-retirement benefit
345 439 obligations 2 724 2 589
13 38 Long-term deferred income 237 96
816 929 Deferred tax liability 5 768 6 113
2 117 3 253 Non-current liabilities 20 201 15 865
865 526 Short-term debt 3 265 6 481
1 359 1 692 Other current liabilities 10 507 10 187
436 662 Bank overdraft 4 113 3 268
2 660 2 880 Current liabilities 17 885 19 936
9 289 11 833 TOTAL EQUITY AND LIABILITIES 73 486 69 619
Income statement
for the year ended 30 June
2003 2004 2004 2003
US$m US$m Rm Rm
7 149 8 747 Turnover 60 151 64 555
Cost of sales and services
(4 357) (5 641) rendered (38 794) (39 347)
2 792 3 106 Gross profit 21 357 25 208
67 50 Non-trading income 343 604
Marketing and distribution
(551) (716) expenditure (4 920) (4 977)
(488) (544) Administrative expenditure (3 744) (4 407)
(312) (391) Other operating expenditure (2 687) (2 809)
(189) (151) Translation losses (1 035) (1 708)
1 319 1 354 Operating profit 9 314 11 911
Dividends and interest
18 28 received 190 167
7 17 Income from associates 117 60
Borrowing costs (net of
(25) (64) amounts capitalised) (439) (225)
1 319 1 335 Net income before tax 9 182 11 913
(444) (461) Taxation (3 175) (4 007)
875 874 Net income after tax 6 007 7 906
(10) (10) Minority interest (67) (89)
865 864 Attributable earnings 5 940 7 817
Basic earnings
per share (cents)
142 142 - attributable earnings basis 974 1 283
142 136 - headline earnings basis 934 1 280
Diluted earnings
per share (cents)*
140 140 - attributable earnings basis 964 1 262
139 134 - headline earnings basis 925 1 259
Dividends per share (cents)
27 33 - interim 215 215
31 38 - final+ 235 235
58 71 450 450
*Taking the Sasol Share Incentive Scheme into account.
+Subject to exchange rate ruling on payment date.
The US dollar convenience translation is calculated on a line-by-line basis in
accordance with International Financial Reporting Standards.
Changes in equity statement (condensed)
for the year ended 30 June
2004 2003
Rm Rm
Opening balance 33 518 31 315
Shares issued 109 77
Shares purchased (33) (185)
Attributable earnings 5 940 7 817
Dividends paid (2 745) (2 835)
Decrease in foreign currency translation
reserve (1 217) (2 570)
Decrease in cash flow hedge accounting reserve (545) (101)
Closing balance 35 027 33 518
Comprising
Share capital 2 892 2 783
Share repurchase programme (3 647) (3 614)
Accumulated earnings 38 236 35 041
Foreign currency translation reserve (1 569) (352)
Non-trading financial assets reserve 2 2
Cash flow hedge accounting reserve (887) (342)
Shareholders` equity 35 027 33 518
Cash flow statement (condensed)
for the year ended 30 June
2004 2003
Rm Rm
Cash receipts from customers 59 952 64 696
Cash paid to suppliers and employees (44 801) (48 699)
Cash generated by operating activities 15 151 15 997
Investment income 230 178
Borrowing costs paid (1 384) (1 286)
Dividends paid (2 745) (2 835)
Tax paid (3 963) (5 527)
Cash available from operating activities 7 289 6 527
Additions to property, plant and equipment (10 888) (10 272)
Acquisition of businesses (555) (155)
Cash acquired on acquisition of businesses 163 119
Disposal of businesses 283 -
Other net expenditure in investing activities (31) (413)
Cash utilised in investing activities (11 028) (10 721)
Share capital issued 109 77
Share repurchase programme (33) (185)
Dividends paid to minority shareholders (37) (65)
Contributions from minority shareholders 75 -
Increase in long-term debt 4 386 122
(Decrease)/increase in short-term debt (2 616) 3 088
Cash effect of financing activities 1 884 3 037
Effect of translation of cash and cash
equivalents of foreign entities (251) (255)
Decrease in cash and cash equivalents (2 106) (1 412)
Cash and cash equivalents at beginning of year 583 1 995
Cash and cash equivalents at end of year (1 523) 583
Comprising
- restricted cash 527 665
- cash 2 063 3 186
- bank overdraft (4 113) (3 268)
(1 523) 583
Value added statement (unaudited)
for the year ended 30 June
2004 2003
Rm Rm
Turnover 60 151 64 555
Purchased materials and services (37 085) (39 066)
Value added 23 066 25 489
Investment income 307 227
Wealth created 23 373 25 716
Employees 8 731 9 055
Providers of equity capital 2 812 2 924
Providers of loan capital 439 225
Governments 3 421 3 651
Reinvested in the group 7 970 9 861
Wealth distribution 23 373 25 716
Salient features
2004 2003
Selected ratios
Return on equity % 17,3 24,1
Return on total assets % 13,4 17,9
Operating margin % 15,5 18,5
Borrowing cost cover times 7,0 9,4
(Net income before tax and borrowing
costs to borrowing costs paid)
Dividend cover times 2,2 2,9
Share statistics
Total shares in issue million 671,3 668,8
Treasury shares
(share repurchase programme) million 60,1 59,7
Weighted average number of shares million 610,0 609,3
Diluted number of shares million 616,2 619,6
Share price (closing) cents 9 610 8 355
Market capitalisation Rm 64 509 55 878
Net asset value per share cents 5 731 5 503
Other financial information
Total debt
(including bank overdraft)
- interest bearing Rm 16 448 14 289
- non-interest bearing Rm 40 41
Capital commitments
- authorised and contracted Rm 10 383 9 562
- authorised, not yet contracted Rm 14 397 8 510
Guarantees and contingent liabilities
- total guarantees Rm 25 835 16 313
- outstanding balance sheet exposure Rm 9 759 5 155
Significant items in operating profit
- employee costs Rm 8 731 9 055
- depreciation of property,
plant and equipment Rm 4 723 4 468
- operating lease charges Rm 350 378
Directors` remuneration Rm 22 29
Share options granted to directors -
cumulative `000 1 451 1 450
Effective tax rate % 34,6 33,6
Employees number 30 910 31 150
Average rand US$ exchange rate US$/R 6,88 9,03
Average crude oil price - dated Brent US$/bbl 31,30 27,83
Reconciliation of headline earnings Rm Rm
Attributable earnings 5 940 7 817
Impairment of assets 342 83
(Profit)/loss on disposal of assets (341) 90
Scrapping of property, plant and
equipment 26 69
Amortisation of goodwill 21 42
Amortisation of negative goodwill (225) (301)
Tax effect on reconciling items above (65) (2)
Headline earnings 5 698 7 798
The reader is referred to the definitions contained in the 2003 Sasol Limited
annual financial statements.
Stronger rand - lower earnings
Profits were again adversely affected by the stronger rand and margin pressures
in a challenging international trading environment. From an operational
perspective, most of Sasol`s businesses performed satisfactorily with several
production records and productivity improvements being achieved.
The average exchange rate during the financial year of R6,88 : US$1,00 was 24%
stronger than the previous year. Including the effect of lower translation
losses at the end of the period (R1,0 billion versus R1,7 billion), the net
adverse impact on operating profit of the strong rand amounted to about R6,0
billion. The associated impact on attributable earnings was R4,2 billion or
about 686 cents per share.
Higher average international oil prices (dated Brent US$31,30 versus US$27,83)
and the benefit of cost reductions and productivity improvements partly offset
the drastic impact of the stronger rand.
Attributable earnings per share of 974 cents was 24% lower than earnings of the
previous comparable reporting period. Headline earnings per share of 934 cents
was 27% lower. In US dollar terms, attributable earnings per share of 142 cents
was equal to the comparable result of the previous reporting period.
It was anticipated when the first half-year results were announced that the
attributable earnings of the second half of the financial year would be much
better than the first half. Attributable earnings in the second half was 39%
higher than the first half, and 16% higher than the comparable second half of
the previous financial year.
During the year, impairment charges of R342 million were partially offset by net
profits of R207 million achieved on disposal of assets, relating mainly to non-
performing or non-core activities in the chemicals portfolio. This was further
offset by a gain of R108 million realised on the dilution of our interest in
Sasol Oil in terms of the consideration paid by way of shares for our purchase
of Exel Petroleum. Provisions relating to environmental rehabilitation and
likely retrenchment costs amounting to R138 million were made in Sasol Nitro.
Capital expenditure on property, plant and equipment amounted to R10,9 billion.
The main projects advanced or completed were:
- the Mozambique Natural Gas project - gas reached Secunda and Sasolburg through
the 865 kilometre pipeline from Mozambique, in February and June 2004,
respectively;
- Project Turbo - the fuels enhancement and polymers expansion project which is
scheduled for commissioning as from the last quarter of 2005;
- the GTL fuels projects - in Qatar, which is scheduled for start-up during the
first quarter of 2006, and in Nigeria where the engineering bids are presently
being evaluated;
- 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 at Sasolburg which was commissioned during the first
quarter of 2004.
At 30 June 2004, gearing (net debt as a percentage of shareholders` equity) was
41% which was within the company`s targeted range of 30% to 50%.
The total dividend declared for the year of R4,50 is equivalent to that of the
previous reporting period and reflects a dividend cover of 2,2.
Operating profit of R9 314 million was 22% below the comparable result of the
previous year. The contribution of the major businesses is summarised as
follows:
Sasol Mining
The operating profit of Sasol Mining of R1 177 million was slightly lower than
the previous year. The benefit of higher export coal prices was more than offset
by the adverse impact of the stronger rand. Coal production was higher mainly
because of increased demand from Sasol Synfuels. Continuous miner productivity
improved by 4% and unit cash cost per ton mined was again well controlled and
equal to the previous year.
Sasol Synfuels
The operating profit of Sasol Synfuels of R5 515 million was severely impacted
by adverse currency effects, partly offset by the benefit of higher oil prices.
Output increased by about 5% partly because of improved operational stability
resulting from natural gas from Mozambique being introduced to supplement
synthesis gas feed. After some years of rand cash costs per unit of production
increasing, new initiatives resulted in these costs reducing on a year-on-year
basis by about 3%.
Sasol Liquid Fuels Business
The benefit of high oil prices was offset by the adverse effect of the stronger
rand. The operating profit of R1 429 million was only slightly higher than the
previous financial year. New supply arrangements to replace the Main Supply
Agreements that expired at the end of 2003 were put into place with the other
oil companies. The roll-out of the new Sasol retail network progressed according
to plan.
Sasol Gas
The operating profit of Sasol Gas reduced by 14% to R387 million. While sales
were satisfactory, once-off costs were incurred in changing the gas supply
networks to customers from hydrogen-rich gas to natural gas piped from
Mozambique.
Sasol Synfuels International
The roll-out of the GTL fuels strategy continued during the year. Start-up of
our first facility in Qatar is expected during the first quarter of 2006. The
operating loss of R138 million is less than the previous year mainly because of
a reduction in overhead costs.
Sasol Olefins and Surfactants
The poor performance of the alkylates and monomers business seriously impacted
the division and an operating loss of R46 million was incurred. The alkylates
business again could not fully recover the increased cost of oil-derivative
feedstocks which reached unprecedented levels in the year. The monomers
business, which is primarily South Africa-based, was adversely affected by the
strong rand and also incurred an operating loss. The other businesses in the
division performed satisfactorily.
Sasol Polymers
The operating profit of R971 million was 9% higher than the previous reporting
period. The benefits of higher international polymer prices, productivity
improvements and the better performance of the division`s Malaysian investments
were mostly offset by the adverse effects of the stronger rand.
Sasol Solvents
Primarily because of its significant exports, the division`s performance was
materially affected by adverse currency effects and operating profit dropped by
69% to R135 million. Excluding currency effects, the division`s performance in
US dollar terms met expectations. The new acrylates complex at Sasolburg was
successfully commissioned during the year.
Other
The significant reduction in the operating profit of this segment was mainly due
to effects of the stronger rand, as well as environmental rehabilitation and
retrenchment expenses provided for in Sasol Nitro.
Profit Outlook
It is likely that the momentum of the improvement achieved in the second half of
the financial year ended 30 June 2004 will continue and a material increase in
earnings in the new financial year is probable, although our performance will
remain sensitive and vulnerable to the volatility of currencies, oil prices and
chemical margins. This profit outlook has not been reviewed by our auditors.
Basis of preparation and accounting policies
The group`s condensed consolidated financial statements for the year ended 30
June 2004 have been prepared in compliance with the Listings Requirements of the
JSE Securities Exchange South Africa, International Financial Reporting
Standards (IFRS) and the South African Companies Act, 1973, as amended.
The accounting policies applied are consistent with those applied in the
previous year and have been prepared in accordance with the historic cost
convention except for certain financial instruments which are stated at fair
value.
The principal reporting currency of the Sasol group is rand. This currency
reflects the economic substance of the underlying events and circumstances of
the group. US$ figures are presented for the balance sheet and income statement
for convenience purposes only.
Financial statements in accordance with US GAAP will be included in the Annual
Report under Form 20-F filed under the Securities and Exchange Act of 1934 which
will be distributed to holders of American Receipts by the end of October 2004.
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.
Significant acquisitions and disposals of businesses
Subsidiaries
With effect from 1 July 2003 Sasol Italy S.p.A. acquired the remaining 48%
shares in G.D. Portbury Limited (Dubai) trading as Sasol Gulf.
With effect from 1 January 2004 Sasol acquired the remaining 77,5% of Naledi
Petroleum Holdings (Pty) Limited, the holding company of Exel Petroleum (Pty)
Limited. The purchase price was settled by the issue of 22 shares in Sasol Oil
(Pty) Limited (representing 2% of the issued shares of the company) to some of
the previous shareholders of Naledi Petroleum Holdings (Pty) Limited and a cash
consideration.
On 30 June 2004, Sasol Chemie GmbH and Co KG disposed of its interest in Sasol
Servo B.V.
Joint ventures
With effect from 1 November 2003 Sasol acquired a 50% interest in Sasol Huntsman
GmbH & Co KG. This transaction formed part of the original acquisition of the
Sasol Chemie business from RWE-DEA.
Sasol Investment Company (Pty) Ltd sold its 50% interest in Sasol Roche Blasting
Services Pty Ltd to Roche Mining Pty Ltd effective February 2004.
Post-balance sheet date events
During April 2004, 30 000 barrels of crude oil a day (being approximately 20% of
Synfuels volume production) was sold forward for the period June 2004 to May
2005 at a weighted average price of US$31,85/bbl by way of over-the-counter
(OTC) Brent crude oil swaps. Subsequent to year-end, the hedge was extended by a
further 15 000 barrels a day for the period August 2004 to May 2005. The total
hedging activity amounts to 45 000 barrels a day (equivalent to approximately
30% of Synfuels` production) at a weighted average Brent crude oil price of
US$33,12/bbl.
Further to the cautionary announcement below, it is envisaged that the new
liquid fuels business will be effected by way of a joint venture in which Sasol
and Petrolium Nasional Berhad (Petronas) will each have an equal 37,5 percent
interest and in which Black Economic Empowerment (BEE) partners (both existing
and new) will hold a combined 25 percent interest.
The parties plan to conclude definitive agreements concerning the joint venture
during the last quarter of 2004. A further announcement will be made at the
conclusion of this process. Definitive agreements will be subject to regulatory
approval which it is hoped will be completed during the first quarter of 2005.
On 1 September 2004, an explosion at the Sasol Polymers` ethylene plant in
Secunda occurred for which we again express our sympathy to those affected. This
will not affect fuel production although polymers production will be affected in
the short-term. The incident is being investigated and further information will
be issued once it becomes available.
Principal foreign currency conversion rates
One unit of foreign currency
equals rand: 30 June 2004 30 June 2003
Rand/US$ (closing) 6,21 7,50
Rand/US$ (average) 6,88 9,03
Rand/euro (closing) 7,57 8,63
Rand/euro (average) 8,19 9,41
Independent audit by KPMG Inc.
The group`s condensed consolidated financial statements have been derived from
the group`s audited consolidated financial statements at 30 June 2004 and for
the year then ended. Our auditors, KPMG Inc., have audited the consolidated
financial statements in accordance with Statements of South African Auditing
Standards. A copy of their unqualified audit report is available for inspection
at the registered office of the company.
Declaration of dividend number 50
The directors of Sasol Limited have declared a final dividend of 235 cents per
share (2003: 235 cents per share) for the year ended 30 June 2004. The dividend
has been declared in the currency of the Republic of South Africa. The salient
dates are:
To holders of ordinary shares:
Last day for trading to qualify for and participate in the dividend
(cum dividend) Friday, 1 October 2004
Trading ex dividend commences Monday, 4 October 2004
Record date Friday, 8 October 2004
Dividend payment date
(electronic and certificated register) Monday, 11 October 2004
On 11 October 2004, 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 have dematerialised their share certificates will have their
accounts at their Central Securities Depository Participant or Broker credited
on Monday, 11 October 2004. Share certificates may not be dematerialised or
rematerialised between Monday, 4 October 2004 and Friday, 8 October 2004, both
days inclusive.
To holders of American Depositary Receipts
Ex dividend on New York Stock Exchange Wednesday, 6 October 2004
Record date Friday, 8 October 2004
Approximate date for currency conversion Thursday, 12 October 2004
Approximate dividend payment date Thursday, 21 October 2004
On behalf of the board
P du P Kruger
Chairman
P V Cox
Deputy chairman & chief executive
Sasol Limited
7 September 2004
Cautionary announcement
Further to the cautionary announcement dated 19 February 2004 by Sasol and
Petronas concerning the proposed combination of their respective interests in
Sasol`s liquid fuels business and Engen in a joint venture to create a leading
South African liquid fuels business, Sasol shareholders are advised that the
parties are still involved in negotiations which, if successfully concluded, may
have a material effect on the price of Sasol`s securities.
Shareholders are accordingly advised to continue exercising caution when dealing
in Sasol securities until a full announcement is made.
Forward-looking statements: 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 not yet determinable, relating, amongst other
things, to exchange rate fluctuations, volume growth, increases in market share,
total shareholder return and cost reductions. These are forward-looking
statements as defined in the United States Private Securities Litigation Reform
Act of 1995. Words such as `believe`, `anticipate`, `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 27 October 2003 and in other filings with the United
States Securities and Exchange Commission.
Please note: A billion is defined as one thousand million
Registered office: Sasol Limited, 1 Sturdee Avenue, Rosebank, Johannesburg
2196, PO Box 5486, Johannesburg 2000
Share registrars: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Johannesburg 2001. PO Box 1053, Johannesburg 2000, South
Africa. Tel: +27 11 370-7700. Fax: +27 11 370 5271/2
Company registration number: 1979/003231/06 , Incorporated in the Republic of
South Africa
ISIN code: ZAE000006896
Share codes: JSE-SOL NYSE-SSL
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.
Directors (non-executive): P du P Kruger (Chairman), E le R Bradley, W A M
Clewlow, B P Connellan, J H Fourie, M S V Gantsho, A Jain (Indian), S
Montsi, S B Pfeiffer (USA), J E Schrempp (German), C B Strauss
(Executive): P V Cox (Deputy chairman and chief executive), L P A Davies, T S
Munday
Company secretary: N L Joubert
website:www.sasol.com e-mail:investor.relations@sasol.com
Date: 07/09/2004 07:00:18 AM Produced by the JSE SENS Department
