UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Report on Form 6-K for June 07, 2013
Commission File Number 1-31615
Sasol Limited
1 Sturdee Avenue
Rosebank 2196
South Africa
(Name and address of registrant's principal executive office)
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Enclosures: Sasol Chief Financial Officer Update
Sasol Limited
(Incorporated in the Republic of South Africa)
(Registration number 1979/003231/06)
Sasol Ordinary Share codes: JSE : SOL NYSE : SSL
Sasol Ordinary ISIN codes: ZAE000006896 US8038663006
Sasol BEE Ordinary Share code: JSE : SOLBE1
Sasol BEE Ordinary ISIN code: ZAE000151817
("Sasol")
7 June 2013
SASOL CHIEF FINANCIAL OFFICER UPDATE
Highlights for the period
Overall solid operational performance despite volatile macro
environment
Sasol Synfuels continues to deliver strong operational
performance
Long-lead equipment orders placed for US ethane cracker
Sasol celebrates the 10 year anniversary of its listing on NYSE
Dear stakeholder
On 9 April 2013, Sasol celebrated the 10 year anniversary of its
listing on the New York Stock Exchange (NYSE). The listing,
following Sasol's listing on the Johannesburg Stock Exchange in
1979, made it possible for Sasol to access the US capital market,
while growing its profile in this investment community as a
compelling investment proposition. Sasol's shares trade in the
form of American Depositary Receipts (ADRs) and listed at US$10,73
per share. Our ADR share price has increased almost five fold
since our listing. The success of our listing bodes well for our
future US investment opportunities. Coupled with our NYSE
celebrations, we held very successful investor strategy days in
New York and Cape Town. We were able to showcase our US investment
proposition in respect of the integrated, world-scale ethane
cracker and downstream derivatives units and the gas-to-liquids
(GTL) and chemical value-adds facility at Lake Charles in
Louisiana. We are currently executing the front-end engineering
and design (FEED) phase of the integrated, world-scale ethane
cracker and downstream derivatives and will commence FEED for the
GTL and chemicals value-adds facility during the second half of
the 2013 calendar year. We have already placed orders for long-
lead equipment for the ethane cracker.
In the first nine months of the 2013 financial year, we have
delivered solid financial results. Sasol Synfuels continues to
deliver strong operational performance and a weaker South African
rand has enhanced group profitability. The average Brent crude oil
price for the nine months softened. Chemical prices remained
depressed, negatively impacting our chemicals businesses, where
demand continues to remain soft.
We continue to make good progress, albeit slower than we initially
anticipated, on our disposal of Arya Sasol Polymers Company
(ASPC). We concluded a memorandum of understanding with an
interested party regarding the disposal of ASPC and at the date of
this update, we are finalising closing activities.
Furthermore, we continue to focus on those factors within our
control including cost containment, operational efficiencies and
margin improvement. However, our current cost inflation is
expected to be above normal producers' price index (PPI) inflation
trends for the 2013 calendar year.
We remain confident that, based on the production guidance and our
macroeconomic assumptions, we will deliver solid operational
performance and earnings for the 2013 financial year compared to
the reported attributable earnings of R23,6 billion in the 2012
financial year, excluding major once-off items such as the impact
resulting from the ASPC disposal.
Best regards,
Christine Ramon
7 June 2013
Johannesburg
This update is based on information for the nine months ended 31
March 2013, however, where practical, information to 30 April 2013
has been included to indicate business performance.
1. Macroeconomics remain volatile
April
2013
YTD
March
2013
YTD
March
2012
YTD
Change in %
March
YTD
Macroeconomic indicators
Average rand/US$
8,68
8,64
7,67
13%
Brent crude oil (US$/b)
109,85
110,71
113,75
(3%)
Henry Hub gas price
(US$/mmbtu)
3,34
3,25
3,32
(2%)
Product prices
SA fuel price (US$/b)
130
129
131
(2%)
Ethylene (US$/ton)
1 615
1 611
1 548
4%
Propylene (US$/ton)
1 417
1 414
1 468
(4%)
Polymers basket (US$/ton)
1 246
1 247
1 251
-
Solvents basket (US$/ton)
1 222
1 240
1 250
(1%)
Prices reflect international commodities or baskets of
commodities and are not necessarily Sasol specific.
Sources: RSA Department of Energy, ICIS-LOR, Reuters, Platts,
International Energy Agency
World economic growth remained cautious in the third quarter of
Sasol's current financial year as gross domestic product (GDP)
growth slowed in the United States (US) and the euro zone
recession deepened. In contrast, Chinese economic growth
accelerated in the quarter, easing fears of a hard landing. In
South Africa, GDP growth improved in the quarter even as a
further contraction in mining output continued to weigh on
overall economic activity.
In recent months, the downside risks to the global economic
outlook have eased, but have not disappeared. The fiscal cliff
in the US was avoided early in the 2013 calendar year. However,
the impact of tax increases and the budget sequester will likely
only become more apparent during the course of the 2013 calendar
year. Following the European Central Bank's pledge to do
"whatever it takes" to ensure the survival of the euro, risks
associated with a disintegration of the euro zone have been
reduced significantly. While the Chinese economy appears to have
avoided a hard landing, recent weak economic activity indicators
do raise questions over the durability of the recovery.
Nonetheless, it is believed that growth in China will stabilise
around 7,5 - 8,0%.
In South Africa, uncertainty surrounding the outcome of the
upcoming wage negotiation process, potential electricity supply
shortages, anticipated slower growth in household consumption
expenditure and timid global demand conditions are all likely to
weigh on domestic growth prospects during the course of this
calendar year. It is not expected that GDP growth will show a
significant improvement on the 2,5% growth recorded in the 2012
calendar year.
The ebb-and-flow of news related to the health of the global
economy is likely to lead to ongoing oil price and exchange rate
volatility. Aside from global news flow, South Africa specific
factors such as potential labour market instability, electricity
supply constraints and current account deficit concerns are
expected to exacerbate rand/US dollar exchange rate volatility.
Chemical product margins continued to be under pressure as
feedstock price increases outweighed the increases in selling
prices. This has been particularly evident in our Sasol Polymers
and Sasol Solvents businesses, which have experienced lower
demand and softer product prices on the back of weakening
European macroeconomic conditions. Our Sasol Olefins and
Surfactants (O&S) business managed to maintain its total gross
margin, despite a slight reduction in volumes.
Across our operations, we remain focused on working capital
management, cost containment, production planning and
optimisation as well as margin improvement activities.
2. Solid operational performance
April
2013 YTD
March
2013 YTD
March
2012 YTD
Change in %
March
YTD
Total production
Sasol Mining (mt)
33,0
29,5
29,8
(1%)
Sasol Gas (mGJ)
132,9
119
112
6%
Sasol Synfuels (kt)
6 160
5 533
5 262
5%
Sasol Oil (m3)
6 390 534
5 706 861
6 056 387
(6%)
Total product yield
(%)
97,58
97,60
97,88
-
ORYX GTL* (mbbl)
3,6
3,3
3,6
(8%)
Canada shale gas
assets* (bscf)
19,9
18,1
11,4
59%
Arya Sasol Polymer
Company* (kt)
305
281
302
(7%)
Sasol O&S (kt)
1 650
1 466
1 488
(1%)
* Sasol's share of production
Sasol Synfuels' year-to-date production for the nine months to
31 March 2013 was 5,5 million tons (mt). This represents a 5%
increase compared to the prior year comparable period. The
improved production is underpinned by the commissioning of new
plant and equipment, notably four additional gasifiers, the
impact of the 17th reformer (steam methane reformer) and
improved plant stability. Included in the positive variance is
the impact of the 2012 industrial action. Delays experienced
during the gas heated heat exchange reformers' (GHHER's) east
turnaround are adversely impacting Sasol Synfuels' production
targets compared to the first half of the financial year. Sasol
Synfuels' cash unit costs remain under pressure as a result of
higher coal feedstock prices, as well as increased energy,
labour and maintenance costs. Sasol Synfuels' cash cost
inflation per unit was, however, largely in line with PPI,
excluding the coal feedstock and the abnormal electricity price
increases.
Our ORYX gas-to-liquids (GTL) joint venture, in Qatar, achieved
3,3 million barrels (mbbl) (Sasol's 49% share) cumulative
production over the nine month period. The decrease in
production volumes compared to the prior year is as a result of
the planned statutory shutdown which commenced in February 2013
and was completed in April 2013. The shutdown has enabled ORYX
GTL to progress various key de-bottlenecking projects which have
already resulted in operational benefits since start-up. Average
throughput for the month of May 2013 was above 106% of design
capacity.
The performance of our Sasol Olefins & Surfactants' (Sasol O&S)
business for the nine month period continues to highlight the
contrasting supply and market conditions that prevail between
our US and European operations. Our US operations continued to
benefit from low US ethane prices, while our European based
businesses came under increased pressure as a result of reduced
volumes and lower margins. Total production and sales volumes
for the nine months to 31 March 2013 are marginally lower when
compared to the prior year comparable period. We expect Sasol
O&S's operating margins to remain within the guided 7% to 11%
range through the cycle. The 100 000 tons per annum ethylene
tetramerisation unit, currently being constructed at Sasol O&S's
Lake Charles, Louisiana site in the US, remains on schedule and
is expected to start up during the third quarter of the 2013
calendar year.
Arya Sasol Polymer Company (ASPC) production volumes were 7%
down compared to the prior year comparable period. Sasol's 50%
share of the year-to-date total production output from the
plants was 281 kilotons (kt), achieving an average utilisation
rate for the nine month period of approximately 83% of design
capacity. However, due to logistics disruptions at ASPC, sales
volumes were negatively impacted.
Our South African-based polymers business continues to
experience severe margin pressure in line with the global
polymers industry, incurring an operating loss of R1 453
million, excluding income from associates of R318 million, for
the nine months ended 31 March 2013. Operating losses for the
full financial year are expected to be between R2,0 billion and
R2,2 billion. Average sales prices improved compared to the
first six months of this financial year, due to the weaker
rand/US dollar exchange rates. However higher feedstock costs
eroded these benefits. Sales volumes were 7% higher than the
prior year comparable period. This performance was underpinned
by a 7% increase in saleable production, due to improved plant
efficiencies coupled with more stable operations. Cash fixed
costs in this business continue to remain under pressure and
during the period, in addition to normal inflation increases,
additional maintenance outage costs were incurred compared to
the prior year comparable period due to scheduled maintenance
outages. The Sasol Polymers business has commenced a turnaround
intervention to restore the overall profitability of the
business and the design phase is underway. Our projects
identified to improve production performance are making
significant progress. The Ethylene Purification Unit (EPU5)
project, which will increase ethylene available for our
polyethylene plants by approximately 48 kt per annum, is
expected to be operational in the second half of the 2013
calendar year, while the C3 stabilisation project will achieve
beneficial operation during the middle of the 2014 calendar
year.
Sasol Solvents' business performance for the nine months to 31
March 2013 has improved from the first six months of the
financial year but, remains under pressure. Sales volumes were
4% above those of the prior year comparable period, despite
production volumes being 2% below those of the same period. Our
European operations continue to experience the effects of the
euro zone crisis and incurred losses for the nine month period.
Margins remain under severe pressure, mainly due to higher
feedstock prices. The weaker rand did, however, soften the
effects of lower US dollar selling prices and US margins.
In our other chemical businesses, the gross margin of our Sasol
Wax business for the nine months ended 31 March 2013 was 5%
higher than the prior year comparable period, despite 1% lower
sales volumes. Hard wax sales for the first nine months of the
financial year are, however, at similar levels compared to the
prior year comparable period. During the period, the electricity
co-generation plant in Hamburg, Germany was installed, with
beneficial operation being achieved in April 2013. It is
anticipated that this plant will yield a 16% energy cost saving
and reduce our carbon footprint by approximately 17 000 tons per
annum. Sasol Nitro experienced challenging operating conditions
during the period. The explosives business was negatively
impacted by the mining sector labour unrest experienced in the
first half of the financial year, while the fertiliser business
faced supply constraints due to a slower ramp-up of the new
limestone ammonium nitrate (LAN) fertiliser granulation plant in
Secunda, which reached beneficial operation on 2 May 2013.
Sasol Petroleum International (SPI) successfully completed the
extended well test on the I9-Z light oil well in the Inhassoro
field in Mozambique which was part of the appraisal programme
for the Production Sharing Agreement (PSA) licence area. The PSA
licence area includes several gas discoveries that are adjacent
to the producing Pande and Temane natural gas fields. A
comprehensive appraisal report for the PSA was submitted to the
Mozambican government at the end of November 2012. Subsequent to
this submission, Sasol notified the government that various
existing undeveloped discoveries are deemed to be commercially
viable. A field development plan will be submitted within the
allowed two year period. The project has just entered the pre-
feasibility study phase and an application for a development and
production area was submitted to the Mozambican authorities by
25 May 2013.
A 3-D seismic survey was acquired in the Sofala block, offshore
Mozambique, and 2-D seismic data is also currently being
acquired in the onshore Area A, Mozambique.
The second exploration period for the Mozambican M-10 licence
expired and the licence was relinquished, subsequent to the
drilling of the Mupeji-1 dry well.
The profitability of our Canadian shale gas assets (Farrell
Creek and Cypress A) continue to remain under pressure resulting
from the slow recovery of gas prices in the US, coupled with
higher depreciation. We anticipate a continuation of the current
loss position for the full 2013 financial year. At 31 March
2013, our share of the capital expenditure on the Canadian shale
gas assets amounted to CAD278 million for the nine month period.
At that date, there were a total of 90 wells on stream in
Farrell Creek and six wells on stream in Cypress A, with 20
wells which have been drilled but not yet completed.
Following on the completion of an aeromagnetic survey, a nine
core hole drilling campaign in the Botswana coal bed methane
licences commenced in December 2012, and has just been
completed. At present, we are analysing the data to assess the
next potential steps in the licence.
Sasol is currently in the process of divesting from its
exploration licences in Papua New Guinea.
3. Financial performance
Weaker rand increases inflationary cost pressures
A 13% weaker average rand/US dollar exchange rate R8,64/US$ at
31 March 2013) negatively impacted cash fixed costs for the nine
months ended 31 March 2013. Cash fixed costs, excluding once-
off, growth costs and the impact of exchange rates, have
increased above inflation, resulting primarily from increased
labour, electricity and maintenance costs. We continue to
contain the impact of electricity cost increases, through the
utilisation of our own electricity generation capacity. In
respect of labour costs, we are entering into wage negotiations
over the coming months with our represented unions.
In order to identify opportunities where we can reduce and
contain our cost base on a sustainable basis, a project was
launched to significantly reduce the future cost structures of
the Sasol group. We are finalising our analysis of the cost
drivers in the group. This analysis will be used in conjunction
with procurement and maintenance cost reduction strategies,
underpinned by a drive for shared services. Further information
on our progress on this project will be provided at the year-end
results announcement.
Strong cash generation continues to fund growth
Free cash flow for the nine months to 31 March 2013, increased
by 18% compared to the prior year comparable period, allowing
the group to maintain its strong balance sheet. Our healthy cash
generating ability has allowed us to successfully sustain our
current operations and fund our approved growth aspirations,
while still delivering attractive returns to our shareholders.
4. Projects update
US integrated ethane cracker complex and GTL complex
We are executing the front-end engineering and design (FEED)
phase of the integrated, world-scale ethane cracker and
downstream derivatives units, and will commence with FEED for
the GTL and chemicals value-adds facility at Lake Charles in
Louisiana during the second half of the 2013 calendar year.
The ethane cracker (estimated to cost between US$5 billion and
US$7 billion) will produce 1,5 million tons of ethylene that
will be used to produce a range of ethylene derivatives. The
main technologies for the ethane cracker and derivative units
have been selected and we have placed orders for critical long-
lead equipment. We expect beneficial operation for the ethane
cracker to be achieved during the 2017 calendar year, with the
final investment decision (FID) to be taken during the 2014
calendar year.
The ethylene produced will be consumed in the production of the
following derivative products:
* ethoxylates, used in the production of surfactants;
* a range of alcohols, used in surfactants as well as a wide
range of specialty applications;
* octene, used as a co-monomer in polyethylene; and
* polyethylene, for film and other markets.
The US GTL facility (estimated to cost between US$11 billion and
US$14 billion) will produce at least a nominal 96 000 barrels
per day (bbl/d) of product, with the potential to produce up to
10% more. The US GTL project will be delivered in two phases
after the ethane cracker, with each phase comprising at least
48 000 bbl/d. The final investment decision for the US GTL
project is expected to be taken within 18 to 24 months after
that of the US ethane cracker.
Around 70% of the production of the GTL facility will be low-
sulphur diesel, with naphtha and liquid petroleum gas (LPG) as
co-products, and 30% of the production will be chemical
products, including paraffin feedstock for linear alkyl benzene
(LAB), wax products and synthetic base oils.
We have submitted the filings for the key environmental permits,
and have regular interaction with the authorities and other
stakeholders to monitor the process. The outcome of the permit
applications are expected later towards the end of the FEED
process. Our experienced, well-resourced integrated owner team
and independent, reputable industry partners will continue to
assess ways in which to manage and mitigate potential risks
associated with executing these projects.
For further information regarding these projects, refer to the
information related to our investor strategy days on our website
www.sasol.com.
Uzbekistan GTL
Our Uzbekistan GTL FEED activities are progressing well and are
expected to be completed during the second half of the 2013
calendar year. An investment decision for this project is,
amongst others, dependent on appropriate project financing.
As a result of the magnitude of Sasol's growth portfolio, as
well as significant sustenance capital required for our South
African operations, Sasol regularly reviews the projects in its
project pipeline. As a result of these reviews, the Sasol
Limited Board, approved that Sasol decreases its shareholding in
the Uzbekistan GTL project from 44,5% to 25,5% at the end of the
FEED phase.
Different shareholding options are currently being evaluated.
The Uzbekistan GTL project remains an important project in
Sasol's GTL growth portfolio and the business case for the
project remains robust.
Mining replacement projects
The development of the Impumelelo and Shondoni Collieries, which
are part of Sasol Mining's R14 billion mine replacement
programme, is progressing. The issue of certain water licences
by the relevant authorities has caused some delay; however, both
the Impumelelo and Shondoni Collieries are still expected to be
completed within budget and on time, reaching beneficial
operation during the fourth quarter of the 2014 and second half
of the 2015 calendar years, respectively.
FT wax expansion project Construction on the FT wax expansion project
facility in Sasolburg, South Africa, continues to progress. The
commissioning of the new Slurry Bed Reactor, which is key
equipment for the capacity expansion, is expected to take place
at the end of March 2014, three months later than previously
announced. Phase 2 of the project will be impacted by the delay
of phase 1 and commissioning of phase 2's key equipment (second
Slurry Bed Reactor) is expected to take place in August 2016. In
our half year-end results announcements, we indicated that we
were assessing the costs of this project. The total project cost
of both phases 1 and 2 has increased from the original approved
budget by 40-45% to an estimated total cost of R11,9 billion.
The total project cost comprises both phase 1 and phase 2 costs,
estimated at R9,0 billion and R2,9 billion, respectively. The
increased cost is primarily related to the brownfield nature of
the project, construction delays and poor labour productivity,
which have been exacerbated by recent strike action and civil
unrest. The economics of the project have been negatively
impacted by the aforementioned schedule delays, as well as the
volatile macroeconomic environment. As a consequence, we are
reassessing the economics of the project. Every effort is being
taken by the project team to monitor and mitigate these risks.
However, it should be noted that this project is a highly-
complex brownfield mega-project, being executed in a labour
constrained environment, where severe labour unrest and low
productivity are being experienced. Accordingly, some
uncertainty on the schedule and costs remain and there is a risk
of potential impairment. Further announcements will be made once
additional information is available in this regard.
Sasol Synfuels growth programme
The Sasol Synfuels growth programme is nearing completion, with
the first pair of the GHHERs to be operational during June 2013.
This will contribute to increased site flexibility and volume
growth, where after the timing of the installation of the second
set of GHHERs will be finalised. Beneficial operation of the
entire programme is expected to be reached in the second half of
the 2014 calendar year.
Sustainability initiatives
During the period, through Sasol New Energy (SNE), we advanced
the development of our US$246 million additional 140 megawatt
gas-fired electricity generation plant in Mozambique, in
partnership with the country's state-owned power utility
Electricidade de Mozambique (EDM) at Ressano Garcia. EDM will be
the sole-offtaker of the electricity under a power purchase
agreement. Construction (ground works) has commenced on site and
beneficial operation is expected during the first half of the
2014 calendar year.
SNE's external water conservation partnerships have started to
yield results, with the first water savings of a cumulative R4,5
million being realised through the repair of leaking plumbing in
50 000 houses in Sebokeng and Evaton, in the Sasolburg region.
The project will now start to become self-funded, demonstrating
the sustainability of the "ring-fenced savings" funding model
for the project. The concept of water off-setting has been
positively received by the Parliamentary Portfolio Committee on
Water and Environmental Affairs, and further development of
water off-setting policy by the Department of Water Affairs is
being supported by SNE.
Clean Fuels 2 update
The high level Clean Fuels 2 (CF2) specifications, aligned with
Euro V emission standards, were published in the South African
Government Gazette on 1 June 2012 and are in line with
expectations. Our latest estimates on the capital expenditure to
comply with the core specifications, octane and volume recovery,
is approximately R11,7 billion, attributable to both our share
in the Natref joint venture and Sasol Synfuels. These estimates
are subject to change, based on the finalisation of feasibility
studies being carried out in this regard.
Sasol was encouraged by the South African Finance Minister's
budget announcement on 27 February 2013, which indicated that
support mechanisms will be introduced to assist the local
refineries with the introduction of environmentally friendly
fuels. Details of these mechanisms are expected by the end of
June 2013. We continue to engage with the South African
government (National Treasury and the Department of Energy) on
cost-recovery mechanisms and specifications to be prepared and
published by the South African Bureau of Standards.
5. Update on strategic issues
Credit rating
Our foreign currency credit rating published by Standard &
Poor's (S&P) on 16 October 2012, is BBB/Negative/A-2, and S&P's
local currency rating for the sovereign (South Africa) is A-
/Negative/A-2. Our foreign currency credit rating published by
Moody's Investors Service on 29 March 2013, is Baa1/stable/P-2,
and our national scale issuer rating is Aa3.za/P-1.za.
The credit ratings reflect our local and international
activities, diversified along the integrated value chain, as
well as our current strong financial risk profile and prudent
financial policies.
Gearing
Our gearing is currently close to zero. However, as we continue
to advance our North American growth strategy, which constitutes
a significant portion of group capital investment over the next
10 years, gearing is likely to reach our targeted range by the
2016 financial year. We are confident that we will be able to
manage the long-term gearing of the group within our targeted
range, without selling assets and after taking into account the
phasing of our US GTL project, our progressive dividend policy
as well as allowing some flexibility for a buffer against
volatility in commodity prices.
Progressive dividend policy
We remain committed to our progressive dividend policy. Despite
a 13% decline in the interim earnings per share, we maintained
the interim dividend in line with the prior year comparable
period. This supports a minimum total dividend in line with our
2012 full year dividend, barring any material and unforeseen
events or significant fluctuations in the global macroeconomic
environment.
Polymers competition hearing
As reported previously, the South African Competition Commission
(the Commission) alleges that Sasol Chemical Industries Limited
charged excessive prices for propylene and polypropylene in the
South African market from 2004 to 2007. We continue to dispute
the Commission's allegations. In 2010, the matter was referred
by the Commission to the South African Competition Tribunal (the
Tribunal). The trial was originally set down to be heard before
the Tribunal from 16 July 2012, however, as a result of an
application brought by the Commission to postpone the hearing,
the trial was heard before the Tribunal during 13 May 2013
through to 7 June 2013. We await the outcome of the hearing.
Liquid fuels competition enquiry
The Commission referred its diesel fuel market investigation to
the Tribunal at the end of October 2012. We began engaging with
the Commission in 2008, as part of our group-wide competition
law compliance review, which preceded the Commission's
investigation into the liquid fuels sector. At the time, we
found no evidence to support the Commission's concerns of
possible anti-competitive conduct in the diesel market.
We have reviewed the referral and do not agree with the
Commission's allegations. We are, accordingly, defending the
matter.
Our activities in Iran
The divestiture of our share in ASPC continues to progress well,
albeit slower than initially anticipated. We concluded a
memorandum of understanding with an interested party regarding
the disposal of ASPC. With effect from 28 February 2013, the
investment is classified as a disposal group held-for-sale. As
at the date of this update, we are finalising closing
activities.
Further losses relating to the foreign currency translation
reserve of approximately US$100 million will be recognised in
income once we finally divest from ASPC. The devaluation of the
Iranian currency may further negatively impact our earnings.
There may be further impairments linked to the fair value of the
ASPC asset as a result of the deteriorating Iranian environment
and the accounting requirement to recognise operating profits
for the period since October 2012, which may not be recuperated
through the divestiture process and disposal value.
NERSA gas tariffs
The Gas Act requires that the National Electricity Regulator of
South Africa (NERSA) approves maximum prices of the gas
molecules and the tariffs for use of gas infrastructure. In the
case of Sasol Gas, such approval is required for gas prices and
tariffs applicable from 26 March 2014.
The prices are intended to set a ceiling above which traders,
such as Sasol Gas, cannot price. This is the first step towards
standardising prices, as required by the Gas Act. In line with
the stipulated NERSA process, in December 2012, Sasol Gas made
its submission to the regulator, to apply for the overall
maximum price, as well as the class maximum prices. As required,
Sasol Gas also applied for the approval of its transmission
tariffs and further notified NERSA of its intended distribution
tariffs, which are not regulated.
Under the current pricing system, customer's prices are charged
on a bundled basis, for the gas molecule and the use of the
infrastructure, based on their energy alternative. Under the new
mechanism, the total charge will be unbundled and there will be
standard prices and tariffs. Whereas the previous pricing regime
resulted in a range of prices, within the same customer classes,
the main effect of the new pricing regime will be to standardise
prices so that customers with the same off-take volumes will pay
the same price. The suite of tariffs that a customer will pay
will depend on a customer's geographic location and whether a
customer is supplied off a transmission or distribution
pipeline.
The new prices we will charge will be below the NERSA set
overall and class maximum prices. Sasol in its maximum price
application also applied for a mechanism to transition customers
to the new pricing system. This was approved by NERSA with some
amendments.
Given that NERSA has recently published the reasons for its
decision, Sasol is still in the process of finalising its
standard prices. These actual prices are part of the commercial
engagements that Sasol will undertake with its customers. All
customers will have to migrate to the standard prices, and will
be required to conclude new supply contracts with Sasol.
Carbon tax
Sasol takes note of the release of the second discussion paper
on carbon tax issued by the South African National Treasury in
May 2013. Sasol welcomes the opportunity for further comment and
engagement with government on the matter. We are currently
reviewing the proposals made and will comment in due course.
6. Guidance for the full year
We expect the global environment and South African economy to
maintain a modest recovery into the remainder of the 2013
financial year. However, the continued weakening demand in
Europe and lower growth in emerging markets and the US remain a
concern. We anticipate that crude oil prices will remain stable
over the near term. However, product prices are expected to
experience continued volatility. Uncertainty remains over the
resolution of the European debt crisis and concerns over the US
debt ceiling.
We expect an overall solid production performance for the 2013
financial year with our production guidance remaining unchanged:
Sasol Synfuels volume guidance based on current performance
is anticipated to be at the top end of the previously guided
range of 7,2 to 7,4 million tons for the full year;
The full year average utilisation rate at ORYX GTL in Qatar,
taking into account the statutory shutdown, is expected to be
approximately 80% of nameplate capacity;
Full year production at ASPC in Iran will be approximately
80% of nameplate capacity; and
Our shale gas venture in Canada will continue to show
increased production compared to the prior year due to the
new wells coming on stream. At present we are stabilising our
production, as we have slowed down the drilling of additional
wells.
We remain on track to deliver on our expectations for improved
operational performance. As costs are incurred to improve plant
stability and the weaker rand continues to exert pressure on our
South African businesses, we expect that our normalised fixed
costs will increase above the South African producers' price
index (PPI) inflation. Cost reduction is a specific target
within our short-term incentive scheme and, accordingly,
management continues to focus on controllable cost elements. The
macroeconomic conditions continue to be volatile, impacting our
assumptions in respect of a stable crude oil price and volatile
product prices, stronger refining margins as well as the weaker
rand/US dollar exchange rate. We continue to focus on factors
within our control: volume growth, margin improvement and cost
reduction.
An update on earnings guidance will be provided once we have a
reasonable degree of certainty on the full year results for the
2013 financial year, taking into account any adjustments arising
from our year-end reporting closure process, as well as
remeasurement effects. The potential impairment of our
investment in ASPC, as well as other possible impairments are
not expected to have an impact on headline earnings per share.
The devaluation of the Iranian currency may further negatively
impact our earnings.
The forecast financial information appearing in this update is
the responsibility of the directors and has not been reviewed or
reported on by Sasol's external auditors. We will release
Sasol's full-year results on Monday, 9 September 2013.
7. Other matters
Income statement presentation
Sasol will be changing the presentation of its income statement
for the 2013 financial year. In terms of International Financial
Reporting Standards (IFRS), the income statement can be
presented by nature or by function. Sasol currently presents its
income statement by function. Sasol has elected to change its
income statement presentation to reflect how we effectively
manage our business as well as align to peers. Accordingly,
Sasol will be reporting its income statement by nature with
effect from the 2013 financial year.
The income statement, and appropriate notes, in respect of prior
reporting periods, will be restated. The periods affected are as
follows:
* 30 June 2012
* 30 June 2011
* 31 December 2012
* 31 December 2011
Change in independent auditors
In the spirit of good corporate governance, we have decided to
rotate our independent auditor, KPMG Inc. after more than 25
years of satisfactory service as auditors, at the end of the
2013 financial year. The replacement independent auditor will be
appointed for the 2014 financial year, commencing 1 July 2013.
On 12 February 2013, the Sasol Limited Audit Committee selected
PriceWaterhouseCoopers as the new independent auditor, subject
to approval by the Annual General Meeting on 22 November 2013.
Retirement of Senior Group Executive
Lean Strauss, Senior Group Executive responsible for
international energy, new business development and technology,
announced that he would be retiring from Sasol at the end of
September 2013. During Lean's 31 years at Sasol, he has made a
remarkable contribution to the growth and development of the
group. He will remain available to the group on a consultancy
basis.
8. Other events 2013
9 September
Full-year 2013 financial results release
9 September
Dividend declaration
14 October
Dividend payment (Sasol ordinary shares)
25 October
Dividend payment (ADRs)
22 November
Sasol Limited Annual General Meeting
25 November
CFO letter
9. Investor Relations contacts
Please feel free to contact us as follows:
investor.relations@sasol.com
+27 11 441 3113
The Investor Relations team:
Raj Naidu Executive: Investor Relations and Shareholder Value
Management (Analyst contact)
Sam Barnfather General Manager: Investor Relations Operations
(Financial contact)
Amelia van den Berg (Financial contact)
Sponsor: Deutsche Securities (SA) Proprietary Limited
Forward-looking statements:
Sasol may, in this document, make certain statements that are not
historical facts and relate to analyses and other information
which are based on forecasts of future results and estimates of
amounts not yet determinable. These statements may also relate to
our future prospects, developments and business strategies.
Examples of such forward-looking statements include, but are not
limited to, statements regarding exchange rate fluctuations,
volume growth, increases in market share, total shareholder return
and cost reductions. 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. By their very
nature, forward-looking statements involve inherent risks and
uncertainties, both general and specific, and there are risks that
the predictions, forecasts, projections and other forward-looking
statements will not be achieved. If one or more of these risks
materialise, or should underlying assumptions prove incorrect, our
actual results may differ materially from those anticipated. You
should understand that a number of important factors could cause
actual results to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in such forward-
looking statements. These factors are discussed more fully in our
most recent annual report under the Securities Exchange Act of
1934 on Form 20-F filed on 12 October 2012 and in other filings
with the United States Securities and Exchange Commission. The
list of factors discussed therein is not exhaustive; when relying
on forward-looking statements to make investment decisions, you
should carefully consider both these factors and other
uncertainties and events. Forward-looking statements apply only as
of the date on which they are made, and we do 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. All
references to years refer to the financial year ended 30 June. Any
reference to a calendar year is prefaced by the word "calendar".
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant, Sasol Limited, has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: June 7, 2013 By: V D Kahla
Name: Vuyo Dominic Kahla
Title: Company Secretary