| Mon 7 Mar 2005, 8:27 | | Interim report for the six months ended 31 Dec 04 |
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Sasol Limited - Interim financial report for the six months ended 31 December
2004
Sasol Limited
(Incorporated in the Republic of South Africa)
(Registration number 1979/003231/06)
(ISIN: ZAE000006896)
Share codes:
JSE - SOL
NYSE - SSL
(`Sasol`)
Interim financial report
and declaration of dividend number 51 for the six months ended 31 December 2004
- significant earnings growth
- adverse currency effects partly offset by higher oil prices
- major improvement in chemicals performance
- capital projects advanced - gearing at 42%
- interim dividend increased by 7%
- strategic growth drivers
- grow a global gas-to-liquid (GTL) business
- grow our chemicals portfolio
- exploit upstream hydrocarbon opportunities
Dec-2004 Dec-2003
Rm Rm
Contribution to group turnover
Mining 626 432
Synfuels 408 881
Liquid Fuels Business 11 091 9 188
Gas 715 695
Olefins and Surfactants 8 791 8 349
Polymers 3 617 3 040
Solvents 3 875 2 812
Other 4 683 4 469
33 806 29 866
Dec-2004 Dec-2003
Rm Rm
Operating profit
Mining 537 521
Synfuels 3 693 2 240
Liquid Fuels Business 767 611
Gas 471 197
Synfuels International (51) (63)
Olefins and Surfactants (131) (38)
Polymers 574 244
Solvents 553 87
Other 134 180
6 547 3 979
Balance sheet at
31 Dec 31 Dec 30 June
2004 2003 2004
reviewed reviewed audited
Rm Rm Rm
ASSETS
Property, plant and equipment 50 672 44 325 46 858
Goodwill (and negative goodwill) 580 (50) 92
Intangible assets 1 987 2 188 2 236
Post-retirement benefit assets 231 423 239
Deferred tax assets 507 296 306
Other long-term assets 1 908 1 742 1 877
Non-current assets 55 885 48 924 51 608
Inventories 9 208 8 120 8 292
Trade and other receivables 11 346 10 435 10 971
Short-term financial assets 8 57 25
Cash restricted for use 447 338 527
Cash 2 974 2 761 2 063
Current assets 23 983 21 711 21 878
Total assets 79 868 70 635 73 486
EQUITY AND LIABILITIES
Shareholders` equity 37 492 33 454 35 027
Minority interest 381 262 373
Total equity 37 873 33 716 35 400
Long-term debt 10 746 6 390 9 110
Long-term provisions 2 430 2 448 2 362
Post-retirement benefit obligations 2 843 2 634 2 724
Long-term deferred income 221 105 237
Deferred tax liability 6 164 6 057 5 768
Non-current liabilities 22 404 17 634 20 201
Short-term debt 4 609 6 467 3 265
Short-term financial liabilities 2 127 1 233 1 205
Other current liabilities 9 455 8 842 9 302
Bank overdraft 3 400 2 743 4 113
Current liabilities 19 591 19 285 17 885
Total equity and liabilities 79 868 70 635 73 486
Income statement for the period ended
half-year half-year full year
31 Dec 31 Dec 30 June
2004 2003 2004
reviewed reviewed audited
Rm Rm Rm
Turnover 33 806 29 866 60 151
Cost of sales and services
rendered (21 496) (19 692) (38 794)
Gross profit 12 310 10 174 21 357
Non-trading income 227 234 343
Marketing and distribution
expenditure (2 652) (2 417) (4 920)
Administrative expenditure (1 955) (2 011) (3 744)
Other operating expenditure (926) (1 400) (2 687)
Translation losses (457) (601) (1 035)
Operating profit 6 547 3 979 9 314
Dividends and interest received 68 105 190
Income from associates 81 34 117
Borrowing costs (362) (137) (439)
Net income before tax 6 334 3 981 9 182
Taxation (2 293) (1 454) (3 175)
Net income after tax 4 041 2 527 6 007
Minority interest (58) (41) (67)
Attributable earnings 3 983 2 486 5 940
Basic earnings per share
- attributable earnings
basis cents 650 408 974
- headline earnings basis cents 703 397 934
Diluted earnings per share*
- attributable earnings
basis cents 640 404 964
- headline earnings basis cents 692 393 925
Dividends per share
- interim** cents 230 215 215
- final cents 235
*Taking the Sasol Share Incentive Scheme into account.
**The interim dividend was declared subsequent to 31 December 2004 and is
presented for information purposes only. No provision regarding this interim
dividend has been recognised.
Statement of changes in shareholders` equity for the period ended
half-year half-year full year
31 Dec 31 Dec 30 June
2004 2003 2004
reviewed reviewed audited
Rm Rm Rm
Balance at beginning of period 35 027 33 518 33 518
Negative goodwill written off 610 - -
Shares issued during period 129 60 109
Shares repurchased during period - (33) (33)
Attributable earnings for period 3 983 2 486 5 940
Dividends paid (1 440) (1 431) (2 745)
Foreign currency translations (745) (1 022) (1 217)
Effect of cash flow hedge
accounting (72) (124) (545)
Balance at end of period 37 492 33 454 35 027
Comprising
Share capital 3 021 2 843 2 892
Accumulated earnings 41 473 36 096 38 236
Foreign currency translation
reserve (2 398) (1 374) (1 569)
Share repurchase programme (3 647) (3 647) (3 647)
Investment fair value reserve 2 2 2
Cash flow hedge accounting reserve (959) (466) (887)
Shareholders` equity 37 492 33 454 35 027
Cash flow statement for the period ended
half-year half-year full year
31 Dec 31 Dec 30 June
2004 2003 2004
reviewed reviewed audited
Rm Rm Rm
Cash receipts from customers 33 506 30 175 59 952
Cash paid to suppliers and
employees (25 703) (23 246) (44 801)
Cash generated by operating
activities 7 803 6 929 15 151
Investment income 92 134 230
Borrowing costs paid (729) (737) (1 384)
Tax paid (1 785) (1 841) (3 963)
Dividends paid (1 440) (1 431) (2 745)
Cash retained from operating
activities 3 941 3 054 7 289
Additions to property, plant
and equipment (5 781) (4 515) (10 888)
Acquisition of businesses - (323) (555)
Cash acquired on acquisition
of businesses - 14 163
Disposal of businesses 24 1 283
Cash disposed of on disposal
of businesses (47) - (2)
Other net investing activities 192 (260) (29)
Cash utilised in investing
activities (5 612) (5 083) (11 028)
Share capital issued 129 60 109
Share repurchase programme - (33) (33)
Dividends paid to minority
shareholders (53) (26) (37)
Contributions from minority
shareholders - - 75
Increase in long-term debt 2 172 1 491 4 386
Increase/(decrease) in
short-term debt 1 081 386 (2 616)
Cash effect of financing
activities 3 329 1 878 1 884
Translation effects on cash
and cash equivalents of
foreign entities (114) (76) (251)
Increase/(decrease) in cash
and cash equivalents 1 544 (227) (2 106)
Cash and cash equivalents
- balance at end of period 21 356 (1 523)
- less balance at beginning
of period (1 523) 583 583
Increase/(decrease) in cash
and cash equivalents 1 544 (227) (2 106)
Salient features for the period ended
half-year half-year full year
31 Dec 31 Dec 30 June
2004 2003 2004
Selected ratios
Operating margin % 19,4 13,3 15,5
Borrowing cost cover times 9,2 5,8 7,0
Dividend cover times 2,8 1,9 2,2
Share statistics
Total shares in issue million 673,9 670,2 671,3
Treasury shares
(share repurchase
programme) million 60,1 60,1 60,1
Weighted average number
of shares million 612,4 609,4 610,0
Diluted weighted average
number of shares million 622,5 616,0 616,2
Share price (closing) cents 12 100 9 500 9 610
Market capitalisation Rm 81 542 63 669 64 509
Net asset value per share cents 6 108 5 484 5 731
Other financial information
Total debt
(including bank overdraft)
- interest bearing Rm 18 731 15 543 16 448
- non-interest bearing Rm 24 57 40
Borrowing costs
capitalised Rm 434 600 1 105
Capital commitments
- authorised and
contracted Rm 9 877 7 979 10 383
- authorised, not yet
contracted Rm 10 787 16 961 14 397
Guarantees and contingent
liabilities
- total amount Rm 27 974 17 851 25 835
- outstanding balance
sheet exposure Rm 6 689 7 487 9 759
Significant items in
operating profit
- employee costs Rm 4 680 4 467 8 731
- depreciation of
property, plant
and equipment Rm 1 803 2 207 4 723
Effective tax rate % 36,2 36,5 34,6
Number of employees number 30 150 30 800 30 910
Reconciliation of headline
earnings Rm Rm Rm
Attributable earnings 3 983 2 486 5 940
Capital items 221 41 27
Impairment of assets 242 109 342
Profit on disposal of
assets (42) (68) (341)
Scrapping of property,
plant and equipment 21 - 26
Amortisation of goodwill - 9 21
Amortisation of negative
goodwill - (112) (225)
Deferred tax asset
written off 111 - -
Tax effect on reconciling
items (7) (4) (65)
Headline earnings 4 308 2 420 5 698
Capital items included in operating profit
Mining 6 9 17
Synfuels (14) 9 (3)
Liquid Fuels Business (6) - -
Synfuels International 33 - -
Olefins and Surfactants (248) (4) (21)
Polymers (11) - 59
Solvents - 20 (18)
Other 19 (75) (61)
(221) (41) (27)
The reader is referred to the definitions contained in the 2004 Sasol Limited
annual financial statements.
Material changes in accounting standards
Sasol adopted the revised International Accounting Standard (IAS) 16 -
`Property, Plant and Equipment` with effect from 1 July 2004. IAS 16 requires
that every business performs an assessment of the useful lives of its assets at
least at the end of each financial year and adjusts depreciation charges
accordingly. As a consequence, depreciation charges reduced during the period 1
July 2004 to 31 December 2004 (period under review) by R561 million, mainly in
Sasol Synfuels and the group`s chemical businesses. This change better reflects
the expected remaining utilisation of the group`s assets.
As International Financial Reporting Standard (IFRS) 3 `Business Combinations`
became effective at Sasol from the beginning of this financial year, Sasol has
performed impairment reviews of its goodwill and no longer provides for
amortisation of goodwill or the recognition of negative goodwill. The existing
negative goodwill on 1 July 2004, has been written off against opening
accumulated earnings. The effect on operating profit of these amendments to the
accounting treatment of goodwill amounts to a decrease of R92 million for the
half-year.
The net impact of these two accounting standard changes on operating profit is,
therefore, an increase of R469 million for the half-year.
The recently announced change in the South African normal income tax rate
becomes effective on 1 April 2005 and therefore does not affect the period under
review.
Overview
Operating profit of R6 547 million was 65% higher than the comparable period
under review. Before accounting standard changes, operating profit of R6 078
million was 53% higher than the previous half-year result.
The average exchange rate during the period under review of R6,21:US$1,00 was
12% stronger than the rate (R7,08:US$1,00) of the comparable period under
review. Including the effect of lower translation losses at the end of the
period (R0,5 billion versus R0,6 billion), the net adverse impact on operating
profit of the stronger rand amounted to about R1,6 billion. The associated
impact on headline earnings was R1,1 billion or a decrease of about 180 cents
(45%) per share.
The benefit of higher average international oil prices on operating profit
(dated Brent US$42,77/bbl versus US$28,73/bbl) net of the Sasol Synfuels` oil
hedge, amounted to about R1,2 billion. Together with the benefit of higher
chemical margins, volume increases resulting from new installed capacity,
productivity improvements and the withdrawal from or disposal of non-core or
under-performing businesses in the chemicals portfolio, the adverse impact of
the stronger rand was more than offset.
Headline earnings per share of R7,03 was 77% higher than the comparable period
under review. Before the accounting standard changes, headline earnings per
share of R6,40 was 61% higher than the comparable period under review.
For the period under review, after taking the material accounting standard
changes into account, in US dollar terms, operating profit of US$1 054 million
was 88% higher; attributable earnings of US$641 million was 82% higher; earnings
per share of US$1,05 was 81% higher and headline earnings per share of US$1,13
was 102% higher than the comparable period under review.
The material accounting standard changes resulted in an increase in operating
profit of US$76 million, attributable earnings of US$47 million, earnings per
share of 8 US cents and headline earnings of 10 US cents above that of the
comparable period under review.
Before taking the material accounting standard changes into account, headline
earnings per share of $1,03 was 84% higher than the comparable period under
review.
Capital expenditure during the period under review amounted to R5,8 billion. The
main projects advanced were:
Project Turbo - the fuels enhancement and polymers expansion project which is
scheduled for commissioning from the beginning of 2006;
the GTL fuels projects in Qatar and Nigeria which are scheduled for start-up
during the first quarter of 2006 and the end of 2008 respectively; and
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.
Gearing, which is defined as a percentage of net debt to shareholders` equity,
was 42% at 31 December 2004, which is within the targeted range of 30% to 50%
agreed by the Board.
The interim dividend declared of 230 cents is 7% higher than the comparable
period under review and represents a dividend cover of 2,8 times which is a
return to the preferred dividend cover range of 2,5 to 3,5 times.
Sasol mining
Although production (24 million tons) was 7% lower, operating profit of R537
million was 3% higher mainly because of higher export coal prices which were
about 60% above those of the comparable period under review. Coal exports
represented 8% of total coal sales. The selling price of coal to Sasol Synfuels
was about the same as in the comparable period under review.
Sasol synfuels
Operating profit of R3 693 million was R1 453 million (65%) higher than in the
comparable period under review mainly because of higher oil prices net of the
hedged 30% portion of production (about R1,9 billion) and a 3% increase in
production volumes (about R0,2 billion). Adverse currency effects amounted to
about R0,9 billion. The business benefited from a reduction in depreciation
charges of R218 million as a result of the accounting changes mentioned above.
Sasol liquid fuels business
Operating profit for the period under review of R767 million was 26% higher than
the comparable period under review, mainly because of higher retail sales
volumes and refining margins, which were partly offset by the effects of the
stronger rand and higher costs associated with the retail service station roll-
out.
The dual brand retail network, Sasol and Exel, with more than 180 franchised and
140 dealer-owned outlets across South Africa, is advancing successfully. Sasol
and Petronas agreed the proposed merger of their African liquid fuels businesses
in a joint venture of Sasol Oil and Engen, and approval for this merger is
awaited from the South African Competition Authorities. The Black Economic
Empowerment (BEE) component of the planned merger is progressing well.
Sasol gas
The operating profit of R471 million was R274 million (139%) higher than the
result of the comparable period under review, mainly because of higher sales
volumes following the introduction of natural gas from Mozambique in March 2004
and the associated restructuring of the business.
Sasol synfuels international
The roll-out of the GTL fuel strategy continues to advance with the planned
start-up of the Oryx plant in Qatar during the first quarter of 2006, and the
anticipated appointment in the second quarter of 2005 of the lump sum
engineering, procurement and construction contractor for the Escravos plant in
Nigeria.
Sasol olefins and surfactants (O&S)
The operating loss of R131 million was R93 million higher than the loss of the
comparable period under review mainly because of non-cash adjustments. These
included the impairment of zeolite producing assets in Italy, the write-off of
goodwill in Italy and the changed accounting treatment of goodwill. These
adjustments more than offset the positive effect of the reassessment of asset
lives and the resulting reduction in depreciation. Compared to the comparable
period under review the net negative effect of these adjustments amounted to
R123 million. The cash operating profit improved, therefore, compared to the
comparable period under review.
The operating performance of this division improved towards the end of 2004 when
the cost of oil-derivative feedstocks eased and selling price increases were
achieved in certain sectors.
Sasol polymers
Although the period under review was difficult for Sasol Polymers because of the
unfortunate incident at the Secunda ethylene plant on 1 September 2004, the
financial performance of this division was most satisfactory with higher
international and local selling prices compensating for both increased feedstock
costs and contribution losses resulting from the incident. Operating profit
increased by R330 million (135%) to R574 million.
Sasol solvents
Operating profit for the period under review increased significantly from R87
million to R553 million because of higher international and local selling prices
and the benefit of increased volumes resulting from new installed capacity.
Other
The increase in the operating profits of Sasol Nitro and Sasol Wax because of
improved margin management and the benefits of heightened focus on core
activities, was more than offset by once-off costs incurred by Sasol Infrachem
during the commissioning of the natural gas-fed autothermal reformers that have
replaced the coal-fired gasifiers in Sasolburg.
Profit outlook
Assuming exchange rates and international oil and commodity chemical prices
remain at more-or-less prevailing levels, it is anticipated that attributable
earnings in the second half of the financial year should be at least equal to
that achieved during the six-months period ended 31 December 2004.
Basis of preparation and accounting policies
The condensed consolidated interim financial report for the six months ended 31
December 2004 has 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 in the presentation of the interim financial
report are consistent with those applied for the year ended 30 June 2004 except
for the accounting treatment of goodwill and property, plant and equipment which
have been amended as described in the section `material changes in accounting
standards.`
As the material accounting standard changes have been applied prospectively with
effect from 1 July 2004, comparative figures have not been restated.
Further details will be provided in the annual report for the year ending 30
June 2005.
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.
Disposal of business
During the period, Sasol disposed of its investment in Sasol SouthWest Energy
LLC for R20 million as well as certain other smaller investments.
post balance sheet date events
There were no significant post balance sheet date events.
principal foreign currency conversion rates
One unit of foreign currency equals 31 Dec 31 Dec 30 Jun
2004 2003 2004
Rand Rand Rand
Rand/US$ (closing) 5,66 6,69 6,21
Rand/US$ (average) 6,21 7,08 6,88
Rand/euro (closing) 7,70 8,42 7,57
Rand/euro (average) 7,82 8,18 8,19
independent review by the auditors
The condensed consolidated balance sheet at 31 December 2004 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
unqualified review report is available for inspection at the registered office
of Sasol Limited. An extract from their review report states: `Based on our
review, conducted in accordance with International Standard on Review
Engagements 2400, nothing has come to our attention that causes us to believe
that the accompanying condensed consolidated interim financial statements are
not fairly presented, in all material respects, in accordance with the
International Financial Reporting Standards applicable to Interim Financial
Reporting and in the manner required by the South African Companies Act.`
declaration of interim dividend number 51
The directors of Sasol Limited have declared an interim dividend of 230 cents
per share (2004: 215 cents per share) for the six months to 31 December 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 April 2005
Trading ex dividend commences Monday, 4 April 2005
Record date Friday, 8 April 2005
Dividend payment date
(electronic and certified register) Monday, 11 April 2005
On Monday 11 April 2005, 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 April 2005.
Share certificates may not be dematerialised or rematerialised between Monday, 4
April 2005 and Friday, 8 April 2005, both days inclusive.
To holders of American Depositary Receipts
Ex dividend on New York Stock Exchange Wednesday, 6 April 2005
Record date Friday, 8 April 2005
Approximate date for currency conversion Tuesday, 12 April 2005
Approximate dividend payment date Thursday, 21 April 2005
On behalf of the board
P du P Kruger
Chairman
P V Cox
Deputy chairman and chief executive
T S Munday
Executive director and chief financial officer
Sasol Limited
7 March 2005
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 29 October 2004 and in other filings with the United
States Securities and Exchange Commission. Forward-looking statements apply only
as of the date on which they are made, and Sasol does not undertake any
obligation to update or revise any of them, whether as a result of new
information, future events or otherwise.
Please note: A billion is defined as one thousand million. The financial
statements are presented on a condensed consolidated basis.
Registered office: Sasol Limited, 1 Sturdee Avenue, Rosebank, Johannesburg
2196, P.O. Box 5486, Johannesburg 2000
Share registrars: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Johannesburg 2001. P.O. Box 61051, Marshalltown 2107, South
Africa.
Tel: +27 11 370-7700.
Fax: +27 11 370 5271/2
Directors (non-executive): P du P Kruger (Chairman), E le R Bradley, W A M
Clewlow, B P Connellan, M S V Gantsho, A Jain (Indian), I N Mkhize, S
Montsi, 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
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.
For more information visit our website at www.sasol.com
e-mail:investor.relations@sasol.com
Date: 07/03/2005 07:00:39 AM
Produced by the JSE SENS Department
