AsiaNet 88166

 

JOHANNESBURG, 22 February 2021 /PRNewswire=KYODO JBN/ --

 

     Sasol delivered a good set of results for the six months ended 31 December

2020. Our earnings increased by more than 100% to R15,3 billion from R4,5

billion in the prior period.

 

    Despite a 23% decrease in the rand/barrel oil price, our adjusted EBITDA

decreased by only 6%. This achievement is as a result of a strong cash cost,

working capital and capital expenditure performance in response to the

challenging environment.

 

    Our earnings were positively impacted by the following non-cash adjustments:

 

    - Gains of R4,6 billion on the translation of monetary assets and

liabilities due to a 15% strengthening of the closing rand/US dollar exchange

rate compared to June 2020;

 

    - Gains of R5,0 billion on the valuation of financial instruments and

derivative contracts; and

    - R3,3 billion gain on the realisation of the foreign currency translation

reserve (FCTR), mainly on the divestment of 50% interest in the US LCCP Base

Chemicals business.

 

 

 

Key metrics	Half year 31 Dec 2020	Half year 31 Dec 2019	Change %
EBIT (R million)	21 650	9 853	>100
Adjusted EBITDA1(R million)	18 608	19 839	(6)
Headline earnings (R million)	11 858	3 670	>100
Basic earnings per share (Rand)	23,41	6,56	>100
Headline earnings per share (Rand)	19,16	5,94	>100
Core headline earnings per share2(Rand)	7,86	9,25	(15)
Dividend per share (Rand)
-   Interim (Rand)	-	-	-
-   Final (Rand)	-	-	-

 

   1.  Adjusted EBITDA is calculated by adjusting EBIT for depreciation and

amortisation, share-based payments, remeasurement items, movement in

environmental provisions due to discount rate changes, all unrealised

translation gains and losses and all unrealised gains and losses on our

derivatives and hedging activities.

 

    The comparative periods have been restated to include all unrealised

translation gains and losses and all unrealised gains and losses on derivative

and hedging activities. We believe Adjusted EBITDA is a useful measure of the

Group's underlying cash flow performance. However, this is not a defined term

under IFRS and may not be comparable with similarly titled measures reported by

other companies. (Adjusted EBITDA constitutes pro forma financial information

in terms of the JSE Limited Listings Requirements and should be read in

conjunction with the basis of preparation and pro forma financial information

as set out in the full set of reviewed interim financial results).

 

    2.  Core headline earnings per share (Core HEPS) is calculated by adjusting

headline earnings per share with once-off items such as the translation impact

of closing exchange rate, all realised and unrealised derivatives and hedging

gains/losses, the implementation of the Khanyisa B-BBEE transaction and losses

attributable to the LCCP while still in ramp-up phase.

 

    The comparative period has been restated to include all unrealised

translation gains and losses and all realised and unrealised gains and losses

on derivative and hedging activities.

 

    (Core HEPS constitutes pro forma financial information in terms of the JSE

Limited Listings Requirements and should be read in conjunction with the basis

of preparation and pro forma financial information as set out in the full set

of reviewed interim financial results.)

 

    Our key metrics were as follows:

 

    - Working capital ratio of 14,9% compared to 14,6% for the prior period.

Investment in working capital was R27,3 billion;

    - Capital expenditure of R7,5 billion;

    - Normalised cash fixed reduced by 10% (R3,2 billion) compared to the prior

period;

    - Profit before interest and tax (EBIT) of R21,7 billion compared to R9,9

billion in the prior period;

    - Adjusted EBITDA declined by 6% from R19,8 billion in the prior period to

R18,6 billion;

    - Basic earnings per share (EPS) increased to R23,41 per share compared to

R6,56 in prior period; and

    - Headline earnings per share (HEPS) increased by more than 100% to R19,16

per share compared to the prior period.

 

 

Turnover (R million)						EBIT (R million)
Half year 31 Dec 2019	Half year 31 Dec 2020					Half year 31 Dec 2020			Half year 31 Dec 2019
10 348	10 807			Mining		1 732			1 374
2 635	1 988			Exploration and Production International		897			1 023
41 206	30 178			Energy		5 098			6 743
24 642	27 409			Base Chemicals		3 624			(1 488)
32 933	33 750			Performance Chemicals		1 754			1 294
–	6			Group Functions		8 545			907
111 764	104 138			Group performance		21 650			9 853
(12 594)	(12 170)			Intersegmental turnover
99 170	91 968			External turnover
Net asset value		Half year 31 Dec 2020	Full year 30 Jun 2020		Change %
Total assets (R million)		397 516	479 162		(17)
Total liabilities (R million)		236 473	319 914		26
Total equity (R million)		161 043	159 248		1

 

Rights issue

 

A decision was made not to pursue a rights issue given the current

macroeconomic outlook, and the significant progress made on our response plan

initiatives.

 

The balance sheet deleveraging pathway will continue to be prioritised to

ensure that we operate within our financial covenants and maintain adequate

liquidity headroom, whilst delivering the Sasol 2.0 transformation programme.

 

Balance sheet management

 

Cash generated by operating activities decreased by 40% to R11,7 billion

compared to the prior period and our net cash on hand decreased from R34,1

billion as at 30 June 2020 to R27,6 billion.  

 

Although our cash flows were impacted by low crude oil prices, softer chemical

prices, plant downtime and the impact of COVID-19, our cash conservation

initiative and asset divestment programme enabled us to repay approximately R28

billion (US$2 billion) of debt.  In addition, we repaid ZAR banking facilities

of approximately R4 billion.

 

Actual capital expenditure amounted to R7,5 billion compared to R21,4 billion

during the first six months of 2020.  The free cash flow for the period was

R0,4 billion in a low US$43,62/barrel average oil price environment.

 

To create flexibility in Sasol's balance sheet during this peak gearing period,

our lenders agreed to lift our covenant from 3,0 times to 4,0 times of Net

debt: EBITDA (bank definition) when measured at 31 December 2020. This provided

additional flexibility, subject to conditions, which were consistent with our

capital allocation framework (i.e. prioritising debt reduction through

commitments to suspend dividend payments and acquisitions while our leverage is

above 3,0 times Net debt: EBITDA). We are appreciative of the continued support

from our lenders during this challenging period.

 

Our Net debt: EBITDA ratio at 31 December 2020 was 2,6 times (bank definition),

significantly below the threshold level.

 

At 31 December 2020, our total debt was R126,3 billion compared to R189,7

billion as at 30 June 2020.  During the period, we utilised proceeds from our

asset divestments to repay the US Dollar syndicated loan, as well as a portion

of our revolving credit facility, reducing our US dollar denominated debt by

almost R28 billion (US$2 billion) to R121 billion (US$8,2 billion).

 

Through our comprehensive response plan and planned asset divestments, we

intend to further reduce our net debt to achieve a Net debt: EBITDA ratio of

less than 2,0 times and gearing of 30% by 2023.

 

Our gearing decreased from 114,5% at 30 June 2020 to 76% at 31 December 2020

mainly due to repayment of US dollar debt (20%) and a stronger closing Rand/US

dollar exchange rate (7%).

 

As at 31 December 2020, our liquidity headroom was in excess of R53 billion

(US$3,6 billion) well above our targeted liquidity of at least US$1 billion,

with available rand and US dollar-based funds improving as we advance our

focused management actions. We continue to assess our mix of funding

instruments to ensure that we have funding from a range of sources and a

balanced debt maturity profile.

 

We have no significant debt maturities before November 2021 when the R2,2

billion (US$150 million) term loan becomes due. In terms of the covenant

waivers with the lenders that existed at 30 June 2020, we remain obliged to use

certain planned disposal proceeds to settle debt. As a result, R14,3 billion

(US$975 million) has being classified as short-term debt.

 

We continue to actively manage the balance sheet with the objective of

maintaining a healthy liquidity position and a balanced debt maturity profile.

 

Dividend

 

Given our current financial leverage and the risk of a prolonged period of

economic uncertainty, the Board believes that it would be prudent to continue

with the suspension of dividends. We expect the balance sheet to regain

flexibility following the implementation of our comprehensive response plan

strategy.

 

Mozambique Production Sharing Agreement (PSA) progresses

 

On 19 February 2021 the Board approved the final investment decision (FID) on

the Mozambique PSA license area. The total estimated project cost is US$760

million.

 

Importantly, this project will entail Mozambique in-country monetisation of gas

through a 450 megawatt gas-fired power plant and a liquefied petroleum gas

(LPG) facility in the same time frame. The balance of the gas produced will be

exported to South Africa to sustain our operations.

 

The PSA development underpins Sasol's gas transformation strategy by securing

additional gas supply from southern Mozambique into Sasol's gas value chain

starting 2024 and serves as a cornerstone in addressing Sasol's sustainability

agenda.

 

Note to Editors:

 

The full announcement and the reviewed interim financial results will be

available on the Company's website at

https://www.sasol.com/investor-centre/financial-reporting/annual-integrated-reporting-set.

 

 

The pre-recorded presentation will be available on the following link:

 

https://www.corpcam.com/Sasol22022021

 

The President and Chief Executive Officer and Chief Financial Officer will host

a conference call via webcast at 15h00 (SA time) to discuss the results and

give an update of the business.

 

 

 

Conference call details:

 

 

Monday, 22 February 2021       Time

 

South Africa                             15:00

 

United Kingdom                       13:00

 

United States (ET)                   08:00

 

 

    Live conference call link:  https://www.corpcam.com/Sasol22022021Questions

 

    Issued by:

 

    Matebello Motloung, Manager: Group Media Relations

    Direct telephone: +27 (0) 10 344 9256; Mobile: +27 (0) 82 773 9457

    matebello.motloung@sasol.com

 

    Alex Anderson, Senior Manager: Group External Communication

    Direct telephone: +27 (0) 10 344 6509; Mobile: +27 (0) 71 600 9605

    alex.anderson@sasol.com

 

 

    Source: Sasol Limited