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Sasol - Interim Profit Statement

Release Date: 23/02/1999 14:41:20      Code(s): SOL SOLD
SASOL LIMITED
(COMPANY REGISTRATION NUMBER 79/03231/06)
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
INTERIM PROFIT STATEMENT AND DECLARATION OF DIVIDEND NO 39 FOR THE HALF YEAR
ENDED 25 DECEMBER 1998
OVERVIEW
HEADLINE EARNINGS INCREASED BY 12%, DESPITE THE CURRENTLY DEPRESSED
INTERNATIONAL CRUDE AND PETROCHEMICAL PRICES.
TO COUNTERACT THE DOWNWARD PRESSURE ON THE GROUP'S PROFITABILITY, OPTIMISATION
INITIATIVES HAVE BEEN INTENSIFIED. THESE ARE FOCUSED ON IMPROVING PROFITABILITY
THROUGH COST REDUCTIONS, IMPROVING YIELDS AND EFFICIENCIES, AND OPTIMISING
CAPITAL EXPENDITURE AND WORKING CAPITAL.
FINANCIAL RESULTS
TURNOVER MATERIALLY UP BY 19% AND OPERATING PROFIT INCREASED BY 6% TO R1 808
MILLION DESPITE THE DIFFICULT PREVAILING TRADING CONDITIONS. NET INTEREST
EARNED WAS SIGNIFICANTLY LOWER AT R16 MILLION. THE PROFIT AFTER TAX AMOUNTED TO
R1 255 MILLION, AFTER ADJUSTING FOR THE REDUCTION OF 5% IN THE COMPANY TAX
RATE. THE LOWER COMPANY TAX RATE HAS RESULTED IN A REDUCTION IN THE PROVISION
FOR DEFERRED TAX OF R502 MILLION. HEADLINE EARNINGS  INCREASED BY 12% TO 200
CENTS PER SHARE.
THE BALANCE SHEET OF THE COMPANY REMAINS SOUND WITH GEARING AT 10%. THE GROUP
WAS ABLE TO MEET ITS FUNDING REQUIREMENTS FROM CASH FLOW AND THE UTILISATION OF
CASH SURPLUSES. CASH FUNDS REDUCED FROM R2 341 MILLION TO R912 MILLION.
AN UNCHANGED INTERIM DIVIDEND OF 65 CENTS PER SHARE HAS BEEN DECLARED.
PARTICULARS OF FINANCIAL RESULTS
THE GROUP'S UNAUDITED CONSOLIDATED RESULTS FOR THE HALF YEAR ENDED 25
DECEMBER 1998 ARE AS FOLLOWS:
                              HALF YEAR       HALF YEAR      YEAR
                              ENDED           ENDED          ENDED
                              25/12/1998      25/12/1997     25/06/1998
                              R MILLION       R MILLION      R MILLION
CONSOLIDATED INCOME STATEMENT
TURNOVER                      9 421           7 917          16 666
OPERATING PROFIT              1 808           1 698          3 121
DIVIDENDS RECEIVED            1               2              4
NET INTEREST RECEIVED         16              120            161
INCOME BEFORE TAXATION        1 825           1 820          3 286
PROVISION FOR TAXATION        (570)           (685)          (1 225)
INCOME AFTER TAXATION         1 255           1 135          2 061
OUTSIDE SHAREHOLDERS'
INTEREST                      (13)            (15)           (28)
TAX EQUALISATION RESERVE
TRANSFER                      -               50             100
EARNINGS ATTRIBUTABLE TO
PERMANENT CAPITAL HOLDERS     1 242           1 170          2 133
NET DEBENTURE INTEREST        (31)            (29)           (58)
EARNINGS ATTRIBUTABLE TO
SHAREHOLDERS                  1 211           1 141          2 075
DEFERRED TAX - RATE
ADJUSTMENT                    -502            -              -
                               1 713          1 141          2 075
DIVIDENDS                      (394)          (393)          (890)
DEPRECIATION OF AND
AMOUNTS WRITTEN OFF
FIXED ASSETS                   666            560            1 197
HEADLINE EARNINGS PER
SHARE (CENTS)                  199,6          178,4          323,6
EARNINGS PER SHARE
(CENTS)                        199,9          188,6          343,0
DIVIDEND PER SHARE
(CENTS)                        65,0           65,0           147,0
CONSOLIDATED BALANCE SHEET
SOURCE OF CAPITAL
SHARE CAPITAL                  1 537          1 525          1 533
DISTRIBUTABLE RESERVES         12 733         11 028         11 492
CONVERTIBLE DEBENTURES         1 028          1 028          1 028
OUTSIDE SHAREHOLDERS'
INTEREST                       94             78             91
LONG-TERM LIABILITIES          607            491            592
TAX EQUALISATION RESERVE       -              50             -
DEFERRED TAXATION              3 096          3 371          3 514
                               19 095         17 571         18 250
EMPLOYMENT OF CAPITAL
FIXED ASSETS                   15 785         14 190         14 981
OTHER LONG-TERM ASSETS         796            583            645
CURRENT ASSETS                 7 142          6 743          7 893
- CASH FUNDS                   912            1 190          2 341
- OTHER CURRENT ASSETS         6 230          5 553          5 552
CURRENT LIABILITIES            (3 721)        (3 553)        (3 716)
INTEREST-BEARING
SHORT-TERM DEBT                (907)          (392)          (1 553)
                               19 095         17 571         18 250
NET ASSET VALUE PER
SHARE (CENTS)                  2 355,6        2 074,5        2 151,1
NUMBER OF ORDINARY
SHARES IN ISSUE (MILLION)      605,8          605,1          605,5
CAPITAL EXPENDITURE
FOR PERIOD (R MILLION)         1 269          1 515          2 927
CAPITAL EXPENDITURE
AUTHORISED (R MILLION)         2 264          3 124          2 481
CONSOLIDATED CASH FLOW STATEMENT
CASH FLOW FROM OPERATIONS      2 473          2 249          4 301
INVESTMENT INCOME              278            175            269
MOVEMENT IN WORKING
CAPITAL                        (593)          (636)          (318)
CASH GENERATED BY
OPERATING ACTIVITIES           2 158          1 788          4 252
FINANCE COSTS PAID             (261)          (53)           (104)
TAXATION PAID                  (445)          (585)          (1 211)
CASH AVAILABLE FROM
OPERATING ACTIVITIES           1 452          1 150          2 937
DISTRIBUTION TO PERMANENT
CAPITAL HOLDERS                (541)          (540)          (978)
CASH RETAINED FROM
OPERATING ACTIVITIES           911            610            1 959
ACQUISITION OF FIXED
ASSETS                         (1 269)        (1 515)        (2 927)
OTHER MOVEMENTS                433)           21             (18)
INCREASE IN FUNDING
REQUIREMENTS                   (791)          (884)          (986)
SHARE CAPITAL ISSUED           4              7              15
(INCREASE)/DECREASE IN
- OUTSIDE SHAREHOLDERS'
INTEREST                       (10)           (19)           (19)
- LONG-TERM LIABILITIES        15             (419)          (332)
- SHORT-TERM LOANS             (647)          67             1 225
DECREASE IN CASH               (1 429)        (1 248)        (97)
DIVISIONAL CONTRIBUTION TO OPERATING PROFIT
THE CONTRIBUTION TO THE OPERATING PROFIT OF THE GROUP WAS AS FOLLOWS:
                          JUL/DEC    JUL/DEC     JAN/JUNE    YEAR
                          1998       1997        1998        1997/1998
                          R MILLION  R MILLION   R MILLION   R MILLION
SASOL SYNTHETIC
FUELS                     804        680         622         1 302
SASOL MINING              168        108         160         268
SASOL OIL                 288        344         173         517
SASOL CHEMICAL
INDUSTRIES                571        594         491         1 085
OTHER                     (23)       (28)        (23)        (51)
                          1 808      1 698       1 423       3 121
SASOL SYNTHETIC FUELS
THE HIGHLIGHT FOR THE PERIOD WAS THE SUCCESSFUL COMMISSIONING OF THE NEW SASOL
ADVANCED SYNTHOL (SAS) REACTORS WITHIN BUDGET AND ON SCHEDULE. THE FULL IMPACT
OF THE SAS REACTORS WILL ONLY MATERIALISE DURING THE NEXT FINANCIAL YEAR.
OPERATING PROFIT INCREASED FROM R680 MILLION TO R804 MILLION, MAINLY DUE TO
INCREASED PRODUCTION AND INCREASED INCOME RESULTING FROM THE WEAKER EXCHANGE
RATE. PRODUCTION INCREASED BY OVER 3% WHILE THE AVERAGE RAND/DOLLAR EXCHANGE
RATE WEAKENED FROM R4,66/US$1 TO R5,91/US$1.
LOWER CRUDE OIL PRICES AND CONSEQUENTLY CHEMICAL FEEDSTOCK PRICES, HAD A
SIGNIFICANT NEGATIVE EFFECT ON PROFITS. THE AVERAGE DERIVED CRUDE OIL PRICE
FELL FROM US$16,56 TO US$10,70. CRUDE OIL AND CHEMICAL FEEDSTOCK PRICES IN THE
SECOND HALF ARE EXPECTED TO BE EVEN LOWER THAN THOSE OF THE FIRST HALF AND
CONSEQUENTLY OPERATING PROFITS FOR THE SECOND HALF OF THE YEAR ARE FORECAST TO
BE LOWER THAN THOSE OF THE FIRST, FOR THIS DIVISION.
SASOL MINING
THE IMPROVEMENT IN THE PERFORMANCE OF THE MINES CONTINUED WITH OPERATING
PROFITS INCREASING FROM R108 MILLION TO R168 MILLION. THE INCREASE WAS MAINLY
THE RESULT OF INCREASED SALES. OPERATING PROFIT DURING THE SECOND HALF WILL BE
LOWER THAN THAT OF THE FIRST LARGELY DUE TO NON-RECURRING COSTS INCURRED IN
CONNECTION WITH THE MINES' RENEWAL PROGRAMME AND CLOSURES AT THE SIGMA MINE.
SASOL OIL
SASOL OIL'S OPERATING PROFIT AMOUNTED TO R288 MILLION COMPARED WITH R344
MILLION. THE FALL OF R56 MILLION WAS LARGELY DUE TO LOWER AVERAGE DOLLAR
REFINING MARGINS PARTIALLY OFFSET BY THE IMPACT OF THE WEAKER RAND/DOLLAR
EXCHANGE RATE. OPERATING PROFIT FOR THE SECOND HALF OF THE YEAR IS EXPECTED TO
BE SIMILAR TO THAT OF THE FIRST.
SASOL CHEMICAL INDUSTRIES
IT IS THE INTENT TO INCREASE EARNINGS FROM CHEMICALS. TO THIS END THE
SHAREHOLDING IN POLIFIN WAS INCREASED TO OVER 50% THROUGH PURCHASES ON THE OPEN
MARKET. THE SECURITIES REGULATION PANEL RULED THAT AN OFFER TO THE MINORITIES
IS NOT REQUIRED. SASOL'S SHARE OF THE OPERATING PROFIT OF POLIFIN, AFTER THE
INCREASED SHAREHOLDING, AMOUNTS TO R131 MILLION (1997/98 - R189 MILLION). THE
OPERATING PROFIT OF THE REMAINING BUSINESSES OF SASOL CHEMICAL INDUSTRIES,
EXCLUDING POLIFIN, INCREASED BY 9% TO R440 MILLION, LARGELY AS A RESULT OF
CONTINUED GROWTH IN VOLUMES. OVERALL OPERATING PROFIT WAS 4% LOWER AT R571
MILLION.
THE FORECAST PRICES OF SEVERAL CHEMICAL PRODUCTS, NOTABLY AMMONIA AND
ACRYLONITRILE, ARE EXPECTED TO BE LOWER THAN THOSE WHICH PREVAILED DURING THE
FIRST SIX MONTHS OF THE YEAR. HOWEVER, IMPROVED CONTRIBUTIONS FROM SEVERAL OF
THE OTHER BUSINESS UNITS ARE FORECAST AND OPERATING PROFITS IN THE SECOND HALF
OF THE YEAR ARE EXPECTED TO BE SLIGHTLY HIGHER THAN THOSE OF THE FIRST.
PROFIT OUTLOOK
GROWTH IN EARNINGS FOR THE YEAR CAN BE ANTICIPATED, PROVIDED THAT NO MATERIAL
CHANGES TAKE PLACE IN INTERNATIONAL CRUDE OIL AND CHEMICAL PRICES AS WELL AS
THE RAND/DOLLAR EXCHANGE RATE.
YEAR 2000 COMPLIANCE
A FULL-TIME PROJECT TEAM IS ADDRESSING THE MILLENNIUM ISSUE IN RESPECT OF ALL
THE GROUP'S COMPUTER-RELATED EQUIPMENT. THE GROUP IS ON TARGET TO HAVE ALL
KNOWN NON-COMPLIANT SYSTEMS EITHER REPLACED OR UPGRADED TO BE FULLY YEAR 2000
COMPLIANT BEFORE THE END OF THE 1999 FINANCIAL YEAR.
DECLARATION OF INTERIM DIVIDEND NO 39
NOTICE IS HEREBY GIVEN THAT THE DIRECTORS HAVE DECLARED AN INTERIM DIVIDEND OF
65 CENTS PER SHARE (1997 - 65 CENTS PER SHARE) IN RESPECT OF THE SIX MONTHS
ENDED 25 DECEMBER 1998. THE DIVIDEND IS DECLARED IN THE CURRENCY OF THE
REPUBLIC OF SOUTH AFRICA AND WILL BE PAYABLE TO SHAREHOLDERS REGISTERED IN THE
BOOKS OF THE COMPANY AT THE CLOSE OF BUSINESS ON FRIDAY, 12 MARCH 1999.
DIVIDEND CHEQUES IN PAYMENT OF THIS DIVIDEND WILL BE POSTED TO SHAREHOLDERS ON
OR ABOUT 14 APRIL 1999. ELECTRONIC PAYMENT OF THE DIVIDEND WILL TAKE PLACE AT
THE SAME TIME.
NOTICE OF ANY CHANGE OF ADDRESS OF SHAREHOLDERS MUST REACH THE TRANSFER
SECRETARIES, MERCANTILE REGISTRARS LIMITED, PO BOX 1053, JOHANNESBURG, 2000, ON
OR BEFORE 12 MARCH 1999.
BY ORDER OF THE BOARD
N L JOUBERT
COMPANY SECRETARY
23 FEBRUARY 1999
REGISTERED OFFICE TRANSFER SECRETARIES
1 STURDEE AVENUE MERCANTILE REGISTRARS LIMITED
ROSEBANK 11 DIAGONAL STREET
JOHANNESBURG, 2196 JOHANNESBURG, 2001
PO BOX 5486 PO BOX 1053
JOHANNESBURG, 2000 JOHANNESBURG, 2000
DIRECTORS: P DU P KRUGER (CHAIRMAN), P V COX (MANAGING DIRECTOR), E LE R
BRADLEY, W A M CLEWLOW, B P CONNELLAN, L P A DAVIES (EXECUTIVE DIRECTOR), J H
FOURIE (EXECUTIVE DIRECTOR), R HAVENSTEIN (EXECUTIVE DIRECTOR), M J LEVETT, S
MONTSI, J E SCHREMPP (GERMAN)
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