| Mon 6 Mar 2006, 7:00 | | Sasol -Group interim results and declaration of di |
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SOL
SOL
Sasol -Group interim results and declaration of dividend
Sasol Limited
(Incorporated in South Africa)
(Registration number: 1979/003231/06)
ISIN Code: ZAE000006896
Share Code: SOL
NYSE Code: SSL
("Sasol")
Sasol limited group interim financial report and declaration of dividend number
53 for the six months ended 31 December 2005
- Significant earnings growth
- Higher international oil prices
- Major capital projects advanced - R6,1 billion
- Gearing reduces to 29%
- Interim dividend increased by 22%
Balance sheet
at 31 Dec 31 Dec 30 June
2005 2004 2005
Reviewed Reviewed Audited
Restated Restated
Rm Rm Rm
ASSETS
Property, plant and equipment 60 796 50 672 56 550
Goodwill 483 580 509
Intangible assets 1 763 1 987 1 900
Post-retirement benefit assets 275 231 300
Deferred tax assets 416 507 409
Other long-term assets 2 570 1 908 2 212
Non-current assets 66 303 55 885 61 880
Investment held-for-sale 41 - 41
Inventories 11 001 9 208 9 995
Trade and other receivables 12 832 11 346 12 384
Short-term financial assets 17 8 178
Cash restricted for use 598 447 1 002
Cash 2 940 2 974 2 509
Current assets 27 429 23 983 26 109
Total assets 93 732 79 868 87 989
EQUITY AND LIABILITIES
Shareholders" equity 48 665 37 494 43 533
Minority interest 313 379 253
Total equity 48 978 37 873 43 786
Long-term debt 13 754 10 746 12 951
Long-term provisions 3 458 2 430 2 954
Post-retirement benefit
obligations 2 998 2 843 2 970
Long-term deferred income 1 020 221 763
Deferred tax liability 6 446 6 164 6 286
Non-current liabilities 27 676 22 404 25 924
Short-term debt 1 987 4 609 3 300
Short-term financial liabilities 838 2 127 792
Other current liabilities 13 096 9 455 11 572
Bank overdraft 1 157 3 400 2 615
Current liabilities 17 078 19 591 18 279
Total equity and liabilities 93 732 79 868 87 989
Income statement
for the period ended half-year half-year full year
31 Dec 31 Dec 30 June
2005 2004 2005
Reviewed Reviewed Audited
Restated Restated
Rm Rm Rm
Turnover 40 256 33 806 69 239
Cost of sales and services
rendered (22 981) (21 496) (42 267)
Gross profit 17 275 12 310 26 972
Non-trading income 165 227 417
Marketing and distribution
expenditure (2 590) (2 652) (5 097)
Administrative expenditure (1 877) (1 955) (4 075)
Other operating expenditure (1 376) (926) (3 802)
Share-based payment expense (84) (68) (137)
Currency translation losses (418) (457) 91
Operating profit 11 095 6 479 14 369
Dividends and interest received 142 68 149
Income from associates 81 81 184
Borrowing costs (net of costs
capitalised) (269) (362) (587)
Net income before tax 11 049 6 266 14 115
Taxation (3 662) (2 293) (4 568)
Earnings 7 387 3 973 9 547
Attributable to
Shareholders 7 295 3 915 9 437
Minority shareholders 92 58 110
7 387 3 973 9 547
Basic earnings per share
- attributable earnings basis
cents 1 179 639 1 537
- headline earnings basis
cents 1 158 692 1 727
Diluted earnings per share*
- attributable earnings basis
cents 1 152 629 1 511
- headline earnings basis
cents 1 131 681 1 697
Dividends per share
- interim** cents 280 230 230
- final cents 310
* Taking the Sasol Share Incentive Scheme into account.
** The interim dividend was declared subsequent to 31 December 2005 and is
presented for information purposes only. No provision regarding this interim
dividend has been recognised.
Statement of changes in equity
for the period ended half-year half-year full year
31 Dec 31 Dec 30 June
2005 2004 2005
Reviewed Reviewed Audited
Restated Restated
Rm Rm Rm
Balance at beginning of period
as previously reported 35 400 35 400
Share-based payment expense
- prior year adjustment 2 2
Balance at beginning of
period restated 43 786 35 402 35 402
Negative goodwill written off - 610 610
Shares issued during period 258 129 311
Earnings for period 7 295 3 915 9 437
As previously reported 3 983 9 573
Share-based payment expense (68) (136)
Dividends paid (1 920) (1 440) (2 856)
Movement in foreign currency
translation reserve (629) (745) 313
Increase in share-based payment
expense reserve 84 68 137
Movement in cash flow hedge
accounting reserve 44 (72) 552
Movement in minority interest 60 6 (120)
Balance at end of period 48 978 37 873 43 786
Comprising
Share capital 3 461 3 021 3 203
Accumulated earnings 50 410 40 933 45 035
Foreign currency translation
reserve (1 965) (2 398) (1 336)
Share repurchase programme (3 647) (3 647) (3 647)
Share-based payment expense
reserve 695 542 611
Investment fair value reserve 2 2 2
Cash flow hedge accounting
reserve (291) (959) (335)
Shareholders" equity 48 665 37 494 43 533
Minority interest 313 379 253
Total equity 48 978 37 873 43 786
segment report half-year half-year full-year
Dec 2005 Dec 2004 June 2005
Rm Rm Rm
Contribution to group turnover
Mining 705 626 1 471
Synfuels 462 408 820
Liquid Fuels Business 15 539 11 091 23 525
Gas 814 715 1 408
Synfuels International 119 - -
Olefins and Surfactants 9 835 8 791 18 040
Polymers 3 907 3 617 7 199
Solvents 4 364 3 875 8 063
Other 4 511 4 683 8 713
40 256 33 806 69 239
half-year half-year full-year
Dec 2005 Dec 2004 June 2005
Restated Restated
Rm Rm Rm
Operating profit*
Mining 636 533 1 239
Synfuels 7 336 3 686 7 546
Liquid Fuels Business 1 125 763 1 892
Gas 780 470 931
Synfuels International (256) (52) (201)
Olefins and Surfactants 290 (136) (231)
Polymers 394 569 1 475
Solvents 516 551 1 238
Other 274 95 480
11 095 6 479 14 369
*Taking into account the effect of capital items. Refer salient features for
further detail.
Cash flow statement
for the period ended half-year half-year full year
31 Dec 31 Dec 30 June
2005 2004 2005
Reviewed Reviewed Audited
Rm Rm Rm
Cash receipts from customers 39 461 33 506 68 263
Cash paid to suppliers and
employees (27 310) (25 703) (49 451)
Cash generated by operating
activities 12 151 7 803 18 812
Investment income 144 92 169
Borrowing costs paid (688) (729) (1 523)
Tax paid (1 732) (1 785) (3 753)
Dividends paid (1 920) (1 440) (2 856)
Cash retained from operating
activities 7 955 3 941 10 849
Additions to property, plant
and equipment (6 044) (5 781) (12 414)
Acquisition of businesses (147) - -
Disposal of businesses 596 24 36
Cash disposed of on disposal
of businesses (1) (47) (94)
Other net (expenditure in)/
proceeds from investing
activities (328) 192 245
Cash utilised in investing
activities (5 924) (5 612) (12 227)
Share capital issued 258 129 311
Dividends paid to minority
shareholders (39) (53) (64)
Increase in long-term debt 335 2 172 4 165
(Decrease)/increase in
short-term debt (1 010) 1 081 (440)
Cash effect of financing
activities (456) 3 329 3 972
Translation effects on cash
and cash equivalents of foreign
entities (90) (114) (175)
Increase in cash and cash
equivalents 1 485 1 544 2 419
Cash and cash equivalents*
- balance at end of period 2 381 21 896
- less balance at beginning of
period 896 (1 523) (1 523)
Increase in cash and cash
equivalents 1 485 1 544 2 419
*Comprising cash restricted for use, cash and bank overdraft.
Salient features
for the period ended half-year half-year full year
31 Dec 31 Dec 30 June
2005 2004 2005
Restated Restated
Rm Rm Rm
Selected ratios
Operating margin % 27,6 19,2 20,8
Borrowing cost cover
times 16,5 9,1 9,6
Dividend cover
times 4,2 2,8 2,8
Share statistics
Total shares in issue
million 680,5 673,9 676,9
Treasury shares (share
repurchase programme)
million 60,1 60,1 60,1
Weighted average number of shares
million 618,5 612,4 613,8
Diluted weighted average
number of shares
million 633,0 622,5 624,4
Share price (closing)
Rand 226,50 121,00 180,80
Market capitalisation
Rm 154 133 81 542 122 379
Net asset value per share
Rand 78,45 61,08 70,58
Other financial information
Total debt (including bank
overdraft)
- interest bearing
Rm 16 598 18 731 18 865
- non-interest bearing
Rm 300 24 1
Borrowing costs capitalised
Rm 536 434 1 116
Capital commitments
- authorised and contracted
Rm 10 249 9 877 11 429
- authorised, not yet contracted
Rm 5 008 10 787 7 740
Guarantees and contingent
liabilities
- total amount
Rm 31 979 27 974 33 122
- liability on balance sheet
Rm 10 986 6 689 11 230
Significant items in operating
profit
- employee costs
Rm 4 597 4 748 8 782
- depreciation of property,
plant and equipment
Rm 1 783 1 803 3 591
Effective tax rate
% 33,1 36,6 32,4
Number of employees
number 30 185 30 150 30 004
Reconciliation of headline
earnings Rm Rm Rm
Attributable earnings 7 295 3 915 9 437
Capital effects (200) 221 1 275
Impairment of assets 99 242 1 078
Reversal of impairment (140) - -
Profit on disposal of business (199) - (40)
Profit on sale of participation
rights in GTL - (33) (33)
Profit on disposal of assets (12) (9) (20)
Scrapping of property, plant and
equipment 52 21 290
Deferred tax asset written off - 111 122
Tax effect on reconciling items 67 (7) (235)
Headline earnings 7 162 4 240 10 599
Capital effects by operating segment
Mining (2) 6 23
Synfuels (29) (14) (110)
Liquid Fuels Business (7) (6) (63)
Gas 133 - -
Synfuels International - 33 33
Olefins and Surfactants 121 (248) (783)
Polymers 5 (11) (12)
Solvents - - (382)
Other (21) 19 19
200 (221) (1 275)
The reader is referred to the definitions contained in the 2005 Sasol Limited
annual financial statements.
A pleasing performance
Attributable earnings for the first half of the financial year 2006 (the
"interim period") increased by 86% from R3,9 billion to R7,3 billion. Headline
earnings per share increased by 67% to R11,58. In US dollar terms, attributable
earnings per share of US$1,81 represented a 76% increase.
IFRS 2, which refers to share-based payments, applied from 1 July 2005 resulted
in attributable earnings diluting by R84 million and headline earnings per share
reducing by 14 cents during the interim period. Previous years" comparative
information has been restated accordingly.
Higher international oil prices
Operating profit increased by R4,6 billion (71%) to R11,1 billion. Higher
average international oil prices (dated Brent US$59,21/b versus US$42,77/b)
boosted operating profit by about R2,9 billion, taking into account the negative
effect of the Sasol Synfuels oil production hedge incurred in the previous
reporting period of R0,7 billion. This benefit was enhanced by the positive
impact of the weaker rand (average rate R6,52: US$1,00 versus R6,21: US$1,00),
which increased operating profit by approximately R0,6 billion.
The currency effects manifested themselves across all of Sasol"s businesses. The
benefit of higher international oil prices was, however, only realised in the
energy and fuel-related businesses with adverse effects being experienced in the
chemical businesses because of higher oil-derivative feedstock costs.
Furthermore, margins were adversely affected in most of the chemical businesses
by a reduction in international chemical commodity prices.
Major capital projects advanced
Cash flow capital expenditure amounted to R6,1 billion. Major projects advanced
included the fuel quality enhancement and polymer expansion project (Project
Turbo) in South Africa, the Oryx gas to-liquids (GTL) venture in Qatar and the
Arya Sasol polymers project in Iran.
Gearing reduced
Gearing (net debt as a percentage of shareholders" equity) reduced from 42% at
31 December 2004 to 29%. Gearing is expected to return to within our targeted
range of 30% to 50% by the end of the financial year 2006.
Interim dividend increased
The interim dividend declared of R2,80 per share represents a 22% increase
compared to the previous interim dividend declared.
Sasol mining
The operating profit of Sasol Mining of R636 million was R103 million (19%)
better than the previous comparable reporting period, mainly because of slightly
higher sales volumes and selling prices.
Sasol synfuels
Primarily because of higher oil prices and slightly higher production volumes,
Sasol Synfuels achieved an increase in operating profit of 99% to R7 336
million. The increase in production volumes resulted from the shift of a planned
shutdown from September 2005 to September 2006. Higher intake of natural gas
from Mozambique also contributed to improved plant stability. Regrettably, a
number of short, unscheduled shutdowns occurred during the period under review.
The causes are being addressed to avoid reoccurrence.
Sasol liquid fuels business
Higher refinery margins, improved sales volumes and some benefit from a weaker
rand increased operating profit in our liquid fuels business by 47% to R1 125
million.
The expansion of the dual brand (Sasol and Exel) retail network advanced
successfully and market share objectives were met.
The proposed merging of our liquid fuels business with Engen was considered at
the Competition Tribunal during October 2005. The ruling announced by the
Competition Tribunal on 23 February 2006, prohibiting the merger, is being
studied and a response is being formulated together with Petronas of Malaysia.
The Black Economic Empowerment (BEE) component of this merger advanced
successfully with the announcement during the period under review of our broad-
based Tshwarisano LFB Investments transaction. Likewise, the implications of the
ruling on this transaction are being considered.
Sasol gas
Primarily driven by higher selling prices and moderate sales volume increases,
both to external customers and Sasol businesses, operating profit increased by
66% to R780 million including a capital profit of R199 million. On 1 July 2005
the South African Government, through its gas pipeline development company iGas,
acquired a 25% stake in Republic of Mozambique Pipeline Investments Company
(Pty) Limited (ROMPCO), which owns the natural gas pipeline between Mozambique
and South Africa.
Sasol synfuels international
This business hosts the growth ambitions of the group relating to GTL and coal-
to-liquid (CTL) ventures. Its costs are associated with advancing the Qatar and
Nigeria GTL projects and evaluating others in accordance with our strategic
objective to build these global businesses. Costs rose to R256 million in this
period as a direct consequence of increased activity in this respect. We expect
our Oryx GTL plant to come into operation during the second quarter of 2006.
Sasol olefins and surfactants (O&S)
The operating profit of Sasol O&S of R290 million is R426 million better than
the operating loss achieved during the previous comparable reporting period,
mainly because of non-recurring impairment costs incurred during the previous
period and the reversal of impairment costs relating to the Octene train-3
project that were previously written off. Excluding these capital effects, the
operating profit amounted to R169 million, which was R57 million (51%) higher
than the first half of the previous financial year.
Oil-derivative feedstock costs reached record high levels although most of these
increases were recovered through increased product pricing and continuing cost
optimisation initiatives. The results of O&S were also negatively impacted by
Hurricane Rita which caused our Lake Charles site to close down for almost a
month. Towards the end of the reporting period, detergent-range alcohol prices
started to come under pressure in anticipation of significant oleochemical-based
capacity additions coming on stream in South East Asia.
Sasol polymers
Higher oil-derivative feedstock costs from Sasol Synfuels could not be fully
recovered through higher polymer selling prices resulting in significantly
depressed margins. Sasol Polymers achieved an operating profit of R394 million,
which was 31% lower than the comparable result of the previous period.
Sasol solvents
After an extraordinary previous year characterised by unprecedented high selling
prices and margins, market conditions in the solvents industry normalised.
Operating profit of R516 million was
R35 million (6%) lower than the comparable result of the previous reporting
period.
Other businesses
Sasol Nitro"s performance improved because of higher ammonia prices and pleasing
results from our explosives business. The fertiliser business experienced
trading difficulties because of lower sales resulting from high maize
inventories and reduced plantings because of late rains.
The operating profit of Sasol Wax was lower than in the previous period mainly
because of currency effects and higher oil-derivative feedstock cost increases
that were not recovered through selling prices.
Basis of preparation and accounting policies
The condensed consolidated interim financial report for the six months ended 31
December 2005 has been prepared in compliance with the Listings Requirements of
the JSE Limited, International Financial Reporting Standards (IFRS) (in
particular International Accounting Standard 34 Interim Financial Reporting) and
the South African Companies Act, 1973, as amended.
Except as otherwise disclosed, the accounting policies applied in the
presentation of the interim financial report are consistent with those applied
for the year ended 30 June 2005.
The following accounting standards were adopted by Sasol with effect from 1 July
2005:
IFRS2 Share-based payment (with retrospective application);
IFRS4 Insurance contracts;
IAS21 The effect of changes in foreign exchange rates;
IAS24 Related party disclosure;
IAS32 Financial instruments: disclosure and presentation; and
IAS39 Financial instruments: recognition and measurement.
The provisions of IFRS2 Share-based payment have been applied retrospectively
and comparative information restated accordingly. IFRS2 requires that every
business accounts for the effects of its share-based payment expenses on profit
and its financial position, including the effects of share options granted to
employees. The effect of the adoption of this standard is set out in the interim
financial report. Basic earnings and diluted earnings per share were reduced by
11 cents for the six months ended 31 December 2004 and 22 cents for the year
ended 30 June 2005.
The adoption of the remaining standards had no material effect on the financial
results and financial position of the group.
Further details will be provided in the annual report for the year ending 30
June 2006.
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 businesses
On 1 July 2005, a 25% interest in Republic of Mozambique Pipeline Investments
Company (Pty) Limited was sold to iGas (Pty) Limited in terms of the
shareholders" agreement. A profit of R199 million was realised on this
transaction.
The group is advancing the process of preparing its Olefins & Surfactants
business for sale.
Post-balance sheet date events
The 2006 budget presented by the Minister of Finance, South Africa, made
reference to a task force being appointed to investigate a windfall tax which
may affect Sasol. The company is still studying the proposals and will be
engaging with government to obtain further information on the proposed
investigation. Sasol will cooperate with the proposed task force and is
confident that, once all of the pertinent facts have been scrutinised, an
outcome will result in which the interests of all stakeholders would be
addressed.
On 23 February 2006, the South African Competition Tribunal prohibited the
merger between Sasol Oil (Pty) Limited and Engen Limited.
Changes in contingent liabilities since 30 June 2005
The South African Competition authorities received a complaint against Sasol Oil
(Pty) Limited in April 2003. The competition authorities found against Sasol
that it was a dominant firm whose conduct met the test required in establishing
prohibited price discrimination. The company filed a notice of appeal, which was
heard and upheld by the South African Competition Appeal Court.
Principal foreign currency conversion rates
The economic indicators used in preparing the interim report were:
One unit of foreign 31 Dec 31 Dec 30 June
currency equals 2005 2004 2004
Rand/US$ (closing rate) 6,33 5,66 6,67
Rand/US$ (average rate) 6,52 6,21 6,21
Rand/euro (closing rate) 7,49 7,70 8,07
Rand/euro (average rate) 7,85 7,82 7,89
independent review by the auditors
The condensed consolidated balance sheet at 31 December 2005 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
Sasol Limited.
Profit outlook
Assuming lower oil and commodity chemical prices and a stronger rand relative to
the first half, earnings in the second half of the financial year are expected
to be considerably lower than the first half year although pleasing growth in
earnings for the full financial year is anticipated.
Declaration of interim dividend number 53
The directors of Sasol Limited have declared an interim dividend of 280 cents
per share (2004: 230 cents per share) for the six months to 31 December 2005.
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, 31 March 2006
Trading ex dividend commences Monday, 3 April 2006
Record date Friday, 7 April 2006
Dividend payment date (electronic
and certificated register) Monday, 10 April 2006
On 10 April 2006, 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, 10 April 2006.
Share certificates may not be dematerialised or rematerialised between Monday, 3
April 2006 and Friday, 7 April 2006, both days inclusive.
To holders of American Depositary Receipts:
Ex dividend on New York Stock
Exchange Wednesday, 5 April 2006
Record date Friday, 7 April 2006
Approximate date for currency
conversion Tuesday, 11 April 2006
Approximate dividend payment date Thursday, 20 April 2006
On behalf of the board
P V Cox L P A Davies T S Munday
Chairman Chief executive Deputy chief executive and
Chief financial officer
Sasol Limited
6 March 2006
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 26 October 2005 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.
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 V Cox (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),
(executive):
L P A Davies (Chief executive),
T S Munday (Deputy chief executive and chief financial officer),
V N Fakude
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 803866300 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
website: www.sasol.com
e-mail: investor.relations@sasol.com
6 March 2006
Johannesburg
Issued by sponsor: Deutsche Securities (SA) (Proprietary) Limited
Date: 06/03/2006 07:00:26 AM Produced by the JSE SENS Department
