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Sasol Limited - Audited Financial Results

Release Date: 31/08/1999 14:11:20      Code(s): SOL SOLD
SASOL LIMITED
(COMPANY REGISTRATION NUMBER 79/03231/06)
TURNOVER UP 15,1%
OPERATING PROFIT UP 18,6%
ATTRIBUTABLE EARNINGS UP 19,5%
PRODUCTION VOLUMES CONTINUED TO INCREASE
NEW ADVANCED SAS REACTORS SUCCESSFULLY COMMISSIONED
CHAIRMAN'S REVIEW
RESULTS
SASOL'S FINANCIAL RESULTS WERE VERY PLEASING, DESPITE DIFFICULT TRADING
CONDITIONS EXPERIENCED IN THE OIL, PETROCHEMICAL AND RELATED COMMODITY MARKETS
WORLDWIDE. THE GROUP MANAGED TO OVERCOME, WITH DISTINCTION, THE DIFFICULTIES
WHICH FACED THE INDUSTRY. THE OIL AND OTHER COMMODITY PRICES CAME UNDER INTENSE
PRESSURE FOLLOWING THE COLLAPSE OF THE SOUTH-EAST ASIAN MARKETS.
PROFITS ATTRIBUTABLE TO SHAREHOLDERS INCREASED BY A SATISFACTORY 19,5% TO R2
479 MILLION, WHILE UNDILUTED EARNINGS PER SHARE FOR THE 1999 FINANCIAL YEAR
ROSE BY 25,5% FROM 326 CENTS TO 409 CENTS. THE DIVIDENDS PER SHARE FOR THE YEAR
WAS 2,7% HIGHER THAN 1998'S 147 CENTS AT 151 CENTS. GROUP SALES INCREASED
MATERIALLY BOTH IN SOUTH AFRICA AND ACROSS THE WORLD. THIS UNDERSCORES THE
SIGNIFICANT EFFORTS IN SASOL'S DIVERSE OPERATIONS TO ENDURE ONE OF THE MOST
SEVERE DOWNTURNS IN WORLD COMMODITY MARKETS. THE GROUP'S RESILIENCE AND GROWTH
RESULTED FROM EFFECTIVE COST-REDUCTION MEASURES, SUSTAINED CAPITAL INVESTMENT
AND THE HARNESSING OF OPERATIONAL SKILLS AND TECHNOLOGIES.
IT IS ESPECIALLY ENCOURAGING TO HAVE CONTINUED GROWTH IN EXPORT AND FOREIGN
SALES, WHICH ROSE BY 15,2% TO ACHIEVE A RECORD R5129 MILLION TO CONTRIBUTE
26,7% OF GROUP TURNOVER. THESE SALES HAVE INCREASED BY 65,9% OVER THE PAST
THREE YEARS, AN AVERAGE OF 22,0% PER YEAR. SASOL MINING, SASOL SYNTHETIC FUELS
AND SASOL OIL INCREASED THEIR CONTRIBUTIONS TO GROUP PROFITS, WHILE SASOL
CHEMICAL INDUSTRIES REMAINED VIRTUALLY CONSTANT DESPITE DIFFICULT TRADING
CONDITIONS.
PROSPECTS
THE VALUE OF THE RAND IS EXPECTED TO REMAIN AT ITS CURRENT LEVEL AGAINST THE US
DOLLAR, OR EVEN SHOW A FURTHER MODERATE WEAKENING DURING THE NEXT YEAR.
WORLD PRICES FOR MOST COMMODITY CHEMICALS ARE EXPECTED TO IMPROVE AND SALES
VOLUMES FROM NEW CHEMICAL VENTURES WILL FURTHER INCREASE, WHICH WILL HAVE A
POSITIVE IMPACT ON SASOL CHEMICAL INDUSTRIES. HOWEVER, THE SUSTAINABILITY OF
THE OIL PRICE IS HIGHLY DEPENDENT ON MEMBERS OF OPEC ADHERING TO THEIR
RESPECTIVE PRODUCTION QUOTAS. INCREASED PRODUCTION OF CHEMICALS AND SYNTHETIC
OIL FROM THE NEW SASOL ADVANCED SYNTHOL REACTORS WILL CONTRIBUTE TO INCREASED
PRODUCTION LEVELS AT SASOL SYNTHETIC FUELS. REFINING MARGINS ARE EXPECTED TO
IMPROVE DURING THE YEAR AHEAD, WHICH WILL ENHANCE THE PERFORMANCE OF SASOL OIL.
SASOL MINING WILL BENEFIT FROM ITS COMPREHENSIVE RENEWAL PROCESS, WHICH IS
AIMED AT ACHIEVING HIGHER PRODUCTIVITY AND COST REDUCTION.
GROWTH IN OVERALL SALES VOLUMES IS ANTICIPATED AS A RESULT OF IMPROVED MARKET
CONDITIONS, LOCALLY AND ABROAD. THE COMMISSIONING OF FURTHER NEW PRODUCTION
FACILITIES, AS WELL AS EXPANSION OF EXISTING FACILITIES, WILL ENABLE INCREASED
SALES VOLUMES OF NEW AND ESTABLISHED PRODUCTS.
THE IMMINENT ACQUISITION OF THE REMAINING 50% OF THE POLIFIN SHARES WILL ADD A
PLATFORM FOR SIGNIFICANT GROWTH IN THE CHEMICAL SECTOR OF THE GROUP.
COST CONTAINMENT AND FURTHER IMPROVEMENT IN OPERATIONAL EFFICIENCIES REMAIN A
HIGH PRIORITY AT ALL THE DIVISIONS OF SASOL.
TAKING ALL THESE FACTORS INTO ACCOUNT AND BARRING UNFORESEEN CIRCUMSTANCES,
SHAREHOLDERS CAN EXPECT A SATISFACTORY INCREASE IN PROFITS.
OPERATIONAL HIGHLIGHTS
ALL SASOL BUSINESSES ARE ASSERTIVELY SUPPORTING THE GROUP'S VISION AND ITS
STRATEGIC OBJECTIVES FOR SUSTAINABLE GROWTH, TECHNOLOGICAL AND OPERATIONAL
INNOVATION, SKILLS OPTIMISATION AND INCREASED PARTICIPATION IN ESTABLISHED AND
NEW WORLD MARKETS. A SPIRIT OF DILIGENCE, OPTIMISM AND INNOVATION CHARACTERISES
SASOL OPERATIONS. IN THEIR WILLINGNESS TO RISE TO NEW MARKET CHALLENGES, SOME
OF THE GROUP OPERATIONS ARE CURRENTLY INVOLVED IN POTENTIALLY FAR-REACHING
BUSINESS TRANSFORMATION OR RENEWAL PROGRAMMES, ALL OF WHICH ARE CONTINUING TO
DELIVER TANGIBLE RESULTS AND AUGUR WELL FOR SASOL'S ATTAINMENT OF ITS STRATEGIC
OBJECTIVES.
THE GROUP'S GLOBALISATION PROGRAMME CONTINUES TO EVOLVE WITH PROMISE. NEW
PRODUCTION CAPACITY WAS COMMISSIONED IN NORTH AMERICA FOR THE SASOL-DHB
HOLDINGS EXPLOSIVES MANUFACTURING AND MARKETING JOINT VENTURE. A NEW SCHMANN
SASOL INTERNATIONAL JOINT-VENTURE WAX PLANT IS CURRENTLY BEING DEVELOPED IN
VENEZUELA TO FULFIL GROWING DEMAND IN THE PROMISING LATIN AMERICAN AND
CARIBBEAN MARKETS. OTHER POTENTIAL OFFSHORE PRODUCTION AND MARKETING OPERATIONS
ARE UNDER REVIEW.
TO COMPLEMENT THE SUCCESSFUL OPERATIONS OF SASOL CHEMICALS EUROPE AND SASOL
CHEMICALS PACIFIC, THE OPERATIONS OF SASOL NORTH AMERICA ARE TO BE EXPANDED IN
THE 2000 FINANCIAL YEAR TO PROVIDE MARKETING, LOGISTICAL AND TECHNICAL SUPPORT
FOR CHEMICAL PRODUCTS FALLING OUTSIDE THE ALREADY ESTABLISHED ALPHA OLEFINS
PORTFOLIO. BY YEAR-END SASOL HAD ALSO FINALISED ITS PLANS TO ESTABLISH ITS
NEWEST INTERNATIONAL MARKETING OFFICE, SASOL MIDDLE EAST, WHICH COMMENCED
OPERATIONS AT DUBAI IN THE UNITED ARAB EMIRATES ON 1JULY 1999. SASOL MIDDLE
EAST WILL AT FIRST CONCENTRATE PRIMARILY ON MARKETING AND SUPPORTING THE
GROUP'S SOLVENTS PORTFOLIO IN THE GREATER REGION OF THE MIDDLE EAST, NORTH
AFRICA AND THE INDO-PAKISTAN SUBCONTINENT.
THE GROUP'S CAPITAL INVESTMENT PROGRAMME TO DEVELOP NEW, IMPROVED AND EXPANDED
FIXED ASSETS, MOST NOTABLY FOR MINING, SYNFUELS AND CHEMICAL PRODUCTION
FACILITIES, CONTINUED UNABATED DURING THE YEAR. SASOL TECHNOLOGY WAS
RESPONSIBLE FOR MANAGING THE MAJOR CAPITAL INVESTMENT PROJECTS, MOSTLY IN SOUTH
AFRICA, WITH A COMBINED VALUE OF R3,2 BILLION. IN ONE OF SEVERAL WORLD-CLASS
ENGINEERING ACHIEVEMENTS, SASOL TECHNOLOGY AND SASOL SYNTHETIC FUELS (SSF)
COMMISSIONED SEVEN NEW SASOL ADVANCED SYNTHOL (SAS) REACTORS AT SECUNDA DURING
THE YEAR. THIS COMPLEX PROJECT ENTAILED AN ESTIMATED 1,35 MILLION MAN-HOURS AND
WAS COMPLETED ON SCHEDULE AND WITHIN BUDGET WITHOUT INCURRING A SINGLE
DISABLING INJURY. THE PROJECT'S SUCCESSFUL COMPLETION IS FURTHER TESTIMONY TO
SASOL'S TECHNOLOGICAL PROWESS AT UNDERTAKING LARGE-SCALE AND OFTEN HIGHLY
COMPLEX ENGINEERING PROJECTS. MORE SIGNIFICANT THAN THE PROJECT ACHIEVEMENTS
ARE THE YEAR-TO-YEAR COST SAVINGS THAT WILL ACCRUE TO SSF IN SUPPORT OF ITS
TRANSFORMATION PROCESS.
THE SUCCESSFUL COMMISSIONING OF OTHER SIGNIFICANT NEW CAPITAL PROJECTS INCLUDED
THE FIRST PHASE OF SSF'S MEDIUM-TERM GAS EXPANSION PROJECT AND NEW PLANTS FOR
THE PRODUCTION OF HIGH-PURITY 1-OCTENE AND KRYPTON/XENON AT SECUNDA, METHANOL
AT SASOLBURG AND NITRIC ACID AND AMMONIUM NITRATE AT BRANDON, CANADA.
IT IS EXPECTED THAT THE COMMERCIAL APPLICATION OF SASOL'S WIDELY ACCLAIMED NEW
SLURRY PHASE DISTILLATE TECHNOLOGY FOR CONVERTING NATURAL GAS INTO
HIGH-QUALITY, ENVIRONMENT-FRIENDLY DIESEL, WILL CONTRIBUTE SIGNIFICANTLY TO
GROWTH AND TO THE GLOBAL DIVERSIFICATION OF THE GROUP'S INCOME IN THE EARLY
YEARS OF THE NEW MILLENNIUM. THIS INTENT WAS GIVEN IMPETUS BY THE SIGNING, AT
YEAR-END, OF A MEMORANDUM OF UNDERSTANDING WITH CHEVRON (ONE OF THE LARGEST US
OIL COMPANIES) WITH THE AIM OF FORMING A GLOBAL JOINT VENTURE TO EXPLOIT THIS
TECHNOLOGY. A GAS-TO-LIQUIDS PLANT, WITH A PLANNED CAPACITY OF 30000 BARRELS A
DAY, BASED ON SASOL'S SLURRY PHASE DISTILLATE TECHNOLOGY, IS EXPECTED TO BE
COMMISSIONED IN THE NEXT FOUR YEARS AT THE CHEVRON NIGERIA LIMITED FACILITIES
AT ESCRAVOS IN NIGERIA.
THESE ACHIEVEMENTS POINT TO ONE ESSENTIAL ATTRIBUTE: THE QUALITY OF SASOL'S
PEOPLE WORLDWIDE AND THEIR INCREASING WILLINGNESS AND ABILITY TO EMPOWER THE
GROUP'S VISION. THE GROUP MAINTAINED THE IMPETUS OF ITS HUMAN RESOURCES
DEVELOPMENT PROGRAMME, INCLUDING A SUBSTANTIAL INVESTMENT IN VARIOUS EMPLOYEE
TRAINING AND DEVELOPMENT PROGRAMMES. ALL THIS IS BEING ACHIEVED IN LINE WITH
THE CONSIDERABLE CHALLENGE OF IMPLEMENTING AN EXPANDING AFFIRMATIVE ACTION
PROGRAMME THAT MUST, IN TIME, ESTABLISH AN EMPLOYEE COMPLEMENT THAT IS MORE
REPRESENTATIVE OF SOUTH AFRICA'S DIVERSE DEMOGRAPHICS. INCREASED DIVERSITY WILL
ALSO ALLOW THE GROUP TO TAP INTO A GREATER POOL OF TALENT.
THESE OPERATIONAL HIGHLIGHTS ARE BEING ACHIEVED AGAINST A BACKDROP OF
ENCOURAGING DEVELOPMENTS IN THE FIELDS OF INTEGRATED SAFETY, HEALTH,
ENVIRONMENTAL AND QUALITY MANAGEMENT.
SASOL'S PROGRESS IN ENVIRONMENTAL MANAGEMENT CONTINUED IN LINE WITH THE GROUP'S
COMMITMENT TO THE RESPONSIBLE CARE PROGRAMME OF THE INTERNATIONAL CHEMICAL
INDUSTRY. SASOL WILL CONTINUE WITH THE REDUCTION IN EMISSIONS AND WASTE AND THE
IMPLEMENTATION OF THE INTERNATIONAL ISO 14001 ENVIRONMENTAL MANAGEMENT SYSTEM
AT ALL ITS BUSINESS DIVISIONS. THE SASOLBURG OPERATIONS OF SASOL CHEMICAL
INDUSTRIES EARNED THEIR 26TH CONSECUTIVE NOSCAR AWARD, THE HIGHEST SAFETY
RECOGNITION OF THE NATIONAL OCCUPATIONAL SAFETY ASSOCIATION (NOSA) IN SOUTH
AFRICA. SASOL SYNTHETIC FUELS ALSO MANAGED TO FURTHER REDUCE ITS DISABLING
INJURY INCIDENCE RATE, WHILE THE SASOL COAL SUPPLY DIVISION MAINTAINED ITS
FIVE-STAR NOSA RATING.
GLOBAL ECONOMY
THE ASIAN CRISIS IMPACTED PROFOUNDLY ON COMMODITIES, BUT THE BEGINNING OF THE
RECOVERY IS APPARENT AND AUGURS WELL FOR THE GROUP. AT THE BEGINNING OF LAST
YEAR DEMAND SLUMPED AND THE PETROCHEMICALS INDUSTRY WENT INTO SURPLUS. THIS
IMPACTED ON PRICES WITH CRUDE OIL, FOR INSTANCE, DROPPING TO BELOW US$10 A
BARREL.
WHILE THE TURMOIL OF THE FAR EAST TIGER ECONOMIES IS NOT YET OVER, INSTEAD OF
REPORTING ZERO GROWTH IN THE REGION, POSITIVE GROWTH IN MOST OF THOSE
ECONOMIES, ALBEIT SMALL, CAN NOW BE EXPECTED. AGAINST ALL EXPECTATIONS,
ANALYSTS ARE NOW FORECASTING GROWTH OF MORE THAN 2% FOR MOST FAR EAST
COUNTRIES. THE SASOL GROUP IS EXPERIENCING A STEADY INCREASE IN DEMAND FROM
MARKETS WHICH HAD BEEN WRITTEN OFF FOR AT LEAST ANOTHER YEAR.
SASOL HAS CLEARLY SIGNALLED THAT IT IS BECOMING MORE OF AN INTERNATIONAL PLAYER
AND EVENTS IN THE REST OF THE WORLD ARE THEREFORE OF GREATER IMPORTANCE TO IT.
IN EUROPE, STEADY ECONOMIC GROWTH COMPLEMENTED BY EQUALLY POSITIVE ECONOMIC
INDICATORS, ARE BEING EXPERIENCED. ADDING FURTHER LUSTRE TO THE EUROPEAN UNION
IS THE CONSOLIDATION OF CURRENCIES WHICH SHOWS A STRONG ECONOMIC COMMITMENT
FROM MOST EUROPEAN UNION COUNTRIES.
THE AMERICAN ECONOMY CONTINUES TO PERFORM WELL. THAT COUNTRY REMAINS THE
MAINSTAY OF THE WORLD ECONOMY. AS A RESULT, THE BEGINNING OF A STABILISATION IN
COMMODITIES IS BEING SEEN WITH A POSITIVE IMPROVEMENT IN PRICES AS SUPPLY AND
DEMAND COME INTO BALANCE. ALSO ENCOURAGING ARE THE EARLY INDICATIONS OF AN
ECONOMIC RESURGENCE IN JAPAN, WHICH IS ENCOURAGING FOR THE SASOL GROUP.
OIL PRICES DROPPED TO THEIR LOWEST LEVELS OF THE PAST TWO DECADES, WHICH HAD
GRAVE IMPLICATIONS FOR SASOL. A PARTIAL RECOVERY HAS RECENTLY BEEN SEEN WHICH,
HOPEFULLY, WILL HOLD. THE DUBAI CRUDE OIL PRICE CURRENTLY STANDS AT ABOUT US$19
AND ANALYSTS ARE PREDICTING A SLOW CONSOLIDATION OF PRICES IN THE REGION OF
US$19 TO US$20 A BARREL BY 2003. ATTEMPTS BY OPEC MEMBERS TO CUT PRODUCTION
QUOTAS IN A BID TO STABILISE PRICES APPEAR TO BE HOLDING.
WHAT FOLLOWS WILL BE A TEST OF OPEC'S CREDIBILITY, ITS DISCIPLINE AND ITS
POLITICAL WILL. ADDED TO THIS ARE FORECASTS THAT RESERVES IN THE UNITED STATES
AND THE NORTH SEA MAY WELL HAVE PEAKED IN TERMS OF DAILY PRODUCTION. WHAT HOLDS
GOOD FOR OIL ALSO APPEARS TO BE RUBBING OFF ON CHEMICAL COMMODITIES. ALTHOUGH
NOT AS SPECTACULAR, THE CHEMICALS COMMODITY CYCLE APPEARS TO HAVE BOTTOMED OUT
AND WE ARE LOOKING AT AN INITIAL RECOVERY. IT IS ANTICIPATED THAT THIS WILL NOT
BE AS RAPID AS THE RECOVERY WITNESSED IN THE OIL PRICE.
THE OIL INDUSTRY HAS EXPERIENCED SHRINKING MARGINS WHICH HAVE LED TO MERGERS
AND ACQUISITIONS IN ORDER TO DRIVE DOWN COSTS, IMPROVE MARKET SHARE AND EXPLOIT
THE BENEFITS OF GREATER ECONOMIES OF SCALE. "BIG HAS AGAIN BECOME BEAUTIFUL",
LEADING TO SOME OF THE LARGEST MERGERS WITNESSED ON WORLD MARKETS. FIRST WAS
BRITISH PETROLEUM'S (BP) BUY-OUT OF AMOCO IN A US$110-BILLION DEAL, MAKING IT
THE WORLD'S SECOND LARGEST OIL COMPANY. THIS WAS FOLLOWED BY THE BP-AMOCO
PURCHASE OF ARCO AND EXXON'S TAKEOVER OF MOBIL, ALL WITHIN THE LAST YEAR.
THE TOTAL/PETROFINA ALLIANCE IS OF PARTICULAR INTEREST TO SASOL, AS WELL AS THE
POSSIBLE TOTAL/PETROFINA/ELF AND THE DOW/UNION CARBIDE GROUPINGS. THESE
INDUSTRY DEVELOPMENTS ARE A CLEAR REMINDER TO THE UNATTACHED THAT THEY HAVE TO
ACT QUICKLY OR IT IS GOING TO BE TOO LATE. SASOL HAS ALREADY FORMED STRONG
INTERNATIONAL ALLIANCES WITH SOME OF THE MAJOR COMPANIES IN THE OIL AND RELATED
INDUSTRIES. THIS WILL STAND THE GROUP IN GOOD STEAD IN THE YEARS AHEAD.
THE SOUTH AFRICAN ENVIRONMENT
SOUTH AFRICA HAS JUST WITNESSED THE END OF THE NELSON MANDELA ERA WITH THE
RECENT INAUGURATION OF MR THABO MBEKI AS PRESIDENT. SASOL THANKS MR MANDELA FOR
HIS DIGNIFIED LEADERSHIP IN TAKING SOUTH AFRICA OUT OF THE PAST TOWARDS THE
THRESHOLD OF THE THIRD MILLENNIUM. SOUTH AFRICA WAS FORTUNATE TO HAVE HAD A
PERSON OF HIS CALIBRE AT THE HELM AT SUCH A CRITICAL PHASE OF THE
TRANSFORMATION OF OUR NATION INTO A HARMONIOUS MULTI-ETHNIC DEMOCRACY. WE ALSO
PRAY FOR HIS CONTINUED GOOD HEALTH AND WISH HIM PEACE AND CONTENTMENT IN HIS
DESERVED RETIREMENT. IT IS HOPED THAT THE PEACEFUL 1999 GENERAL ELECTIONS,
COUPLED WITH THE SHOW OF GOOD INTENT BY PRESIDENT MBEKI, WILL STIMULATE
ECONOMIC RECONSTRUCTION AND ADVANCEMENT. WHILE PRESIDENT MBEKI'S WILL IS
REQUIRED TO IMPLEMENT SORELY NEEDED SOCIO-ECONOMIC REFORMS, SOUTH AFRICA'S
SURVIVAL DEPENDS ON SUSTAINABLE ECONOMIC GROWTH, FIGHTING OF CRIME AND JOB
CREATION.
I AM VERY POSITIVE ABOUT THE STRONG LEADERSHIP ON SOUND ECONOMIC PRINCIPLES
TAKEN NOT ONLY BY PRESIDENT MBEKI, BUT ALSO BY HIS CABINET IN THE ECONOMIC
PORTFOLIOS. THEIR LEADERSHIP AND VISION, SUCCESSFULLY IMPLEMENTED, WOULD LEAD
TO THE VIBRANT ECONOMY OUR COUNTRY DIRELY NEEDS.
PRESIDENT MBEKI CAN BE SURE OF THE SUPPORT OF BIG BUSINESS - INCLUDING SASOL.
WE ALSO OFFER HIM OUR SUPPORT IN HIS FIGHT TO ERADICATE CORRUPTION, BUSINESS
MALPRACTICE AND CRIME.
HERE, I MUST REITERATE THE FUNDAMENTAL NEED FOR ECONOMIC GROWTH. THIS IS THE
GOLDEN THREAD THAT THE COUNTRY REALLY NEEDS. OUT OF GROWTH COMES STABILITY,
EMPLOYMENT AND THE REVERSAL OF THE CRIME RATE. I ENDORSE WHAT PRESIDENT MBEKI
IS SAYING ABOUT ECONOMIC GROWTH, EMPLOYMENT AND CRIME AND WE SHALL DO
EVERYTHING WE CAN TO ENSURE THAT HIS DREAM IS FULFILLED. I ALSO ENDORSE HIS
CALL FOR BLACK ECONOMIC EMPOWERMENT. WE SUPPORT HIM AND REAFFIRM THAT SASOL
REMAINS AT THE FOREFRONT OF CORPORATES THAT WILL CONTINUE TO ENSURE THAT BLACK
ECONOMIC EMPOWERMENT GROWS AND BECOMES INCREASINGLY PROSPEROUS.
IN THE DOMESTIC SOUTH AFRICAN OIL INDUSTRY SASOL HAS A MINORITY SHAREHOLDING IN
THE BLACK EMPOWERMENT COMPANY, NALEDI PETROLEUM, WHICH IS STARTING TO ESTABLISH
AN IMPRESSIVE FOOTHOLD IN THE RETAIL FUEL MARKET UNDER THE BRAND NAME OF EXEL.
A POTENTIALLY FAR-REACHING MEMORANDUM OF UNDERSTANDING WAS SIGNED BETWEEN SASOL
AND THE MALAYSIAN PETROCHEMICAL GIANT, PETRONAS, DURING THE YEAR. IN TERMS OF
THIS MEMORANDUM, THERE IS THE POSSIBILITY OF MERGING THE FUEL AND LUBRICANT
PRODUCTION, DISTRIBUTION AND MARKETING OPERATIONS OF PETRONAS' SOUTH AFRICAN
SUBSIDIARY COMPANY, ENGEN, WITH THOSE OF SASOL OIL TO CREATE A LARGER, FULLY
INTEGRATED SOUTH AFRICAN OIL COMPANY. SHOULD SUCH A JOINT VENTURE MATERIALISE,
BOTH PARTIES HAVE AGREED THAT IT SHOULD FEATURE A SUBSTANTIAL SHAREHOLDING BY A
BLACK ECONOMIC EMPOWERMENT GROUP.
IN OTHER ESTABLISHED AND PROBABLE BLACK ECONOMIC EMPOWERMENT INITIATIVES, SASOL
AND THE SOUTH AFRICAN FINANCIAL SERVICES GROUP, GENSEC, ESTABLISHED CHEMCITY
INTERNATIONAL CHEMICAL PARK AT SASOLBURG DURING THE 1998 FINANCIAL YEAR AS PART
OF A BROADER COMMITMENT TO FACILITATE AND ENABLE THE GROWTH OF SOUTH AFRICA'S
DOWNSTREAM CHEMICAL INDUSTRY. THERE IS AN UNTAPPED DOWNSTREAM MARKET WITH THE
POTENTIAL TO GENERATE AN ANNUAL INCOME OF MORE THAN R5BILLION. BLACK
EMPOWERMENT GROUPS, IN PARTICULAR, ARE BEING TARGETED FOR THE CHEMCITY VENTURE.
EXPANSION OF ITS SYNTHETIC AND CRUDE OIL DERIVED FUEL PRODUCTION FORMS AN
IMPORTANT PART OF SASOL'S GROWTH STRATEGY. THE COMPANY HAS THEREFORE DECIDED TO
GIVE FIVE YEARS' NOTICE TO THE OIL COMPANIES THAT IT WILL TERMINATE ITS SUPPLY
AGREEMENTS AND BLUE PUMP AGREEMENTS. THIS NOTICE IS EFFECTIVE FROM 1 JANUARY
1999 AND THESE AGREEMENTS WILL TERMINATE ON 31 DECEMBER 2003.
A SIGNIFICANT DEVELOPMENT IN RESPECT OF SASOL'S RELATIONSHIP WITH THE OIL
COMPANIES WAS THE CONSTRUCTIVE RESOLUTION OF ALL DISPUTES RELATING TO THE
INTERPRETATION OF THE ABOVE-MENTIONED AGREEMENTS.
GOVERNMENT POLICY AND PROGRAMMES
ON THE ISSUE OF THE SOUTH AFRICAN LIQUID FUEL INDUSTRY'S IMMINENT DEREGULATION,
SASOL SUPPORTS THE GOVERNMENT AND ITS ENERGY WHITE PAPER IN PRINCIPLE. BUT WE
CAUTION THAT ANY NEW REGULATION SHOULD NOT BE INTRODUCED IN WHAT COULD BE
CONSTRUED AS A HAPHAZARD FASHION. THE PHASING IN OF DEREGULATION MUST BE
ORDERLY WITH COGNISANCE TAKEN OF THE NEEDS AND ASPIRATIONS OF ALL INDUSTRY
ROLE-PLAYERS. ONE FACET OF DEREGULATION MUST FOCUS ON THE PREVIOUSLY
DISADVANTAGED COMMUNITIES WHICH SHOULD BE GIVEN THE OPPORTUNITY TO GROW IN
ORDER TO BECOME MORE COMPETITIVE.
WHEN CONSIDERING GROWTH AND COMPETITIVENESS, REFERENCE MUST BE MADE TO SOUTH
AFRICA'S COMPETITION BOARD AND ITS REACTION TO SASOL'S PLANNED ACQUISITION OF
THE MANUFACTURING AND MARKETING INTERESTS OF AECI LIMITED. STRATEGICALLY AND IN
PRINCIPLE THE AECI ACQUISITION WOULD HAVE MET SASOL'S LONG-TERM AIMS. SASOL HAS
NOT MOVED AWAY FROM ITS GROWTH AND DIVERSIFICATION STRATEGY, BECAUSE CHEMICALS
CONTINUE TO FEATURE PROMINENTLY IN ITS FUTURE PLANS. ALTHOUGH AECI, A
DIVERSIFIED SOUTH AFRICAN CHEMICALS GROUP, WOULD HAVE PRESENTED SASOL WITH AN
AVENUE FOR NEW GROWTH, DIVERSIFICATION AND ENHANCED COMPETITIVENESS AS A RESULT
OF IMPROVED ECONOMIES OF SCALE, THE GROUP WILL FIND OTHER MEANS OF PROVIDING
IMPETUS TO SASOL'S CHEMICAL EXPANSION PROGRAMME. ONE SUCH OPPORTUNITY IS THE
ALREADY ANNOUNCED ACQUISITION OF POLIFIN.
DOMESTIC ECONOMIC FACTORS
CLOSER TO HOME THE SOUTH AFRICAN GOVERNMENT'S COMMITMENT TO FISCAL DISCIPLINE
AND GOOD GOVERNANCE IS NOTED. THE CONTINUING FALL IN INTEREST RATES AND THE
SOUTH AFRICAN RESERVE BANK'S ROLE IN PROMOTING ORDERLY DOWN-PEGGING IS VERY
WELCOME. INFLATION, THE ECONOMIC STUMBLING BLOCK OF MANY OF SOUTH AFRICA'S
NEIGHBOURS TO THE NORTH, APPEARS TO BE UNDER CONTROL. THE RAND HAS ALSO FOUND
ITS OWN LEVEL ON THE WORLD'S FOREX MARKETS.
CAPITAL INVESTMENT AND GROWTH INITIATIVES
SASOL WILL CONTINUE TO INVEST IN SOUTHERN AFRICA AND IT GIVES ME PLEASURE TO
ANNOUNCE THAT THE GROUP'S BUDGETED CAPITAL EXPENDITURE FOR LARGE-SCALE FIXED
INVESTMENTS FOR THE 2000 FINANCIAL YEAR EXCEEDS R3,5 BILLION AND WILL BE
INVESTED IN TWO PRIMARY AREAS: NEW AND ENHANCED CHEMICAL PLANTS; AND NEW AND
IMPROVED PRODUCTION FACILITIES AND INFRASTRUCTURE FOR THE OPERATIONS OF SASOL
MINING, SASOL SYNTHETIC FUELS AND SASOL'S JOINT-VENTURE OIL REFINING COMPANY,
NATREF, AT SASOLBURG. AGAIN, THIS HUGE CAPEX UNDERSCORES SASOL'S LONG-TERM
COMMITMENT TO CREATING JOBS AND PLAYING ITS PART IN PRESIDENT MBEKI'S AFRICAN
RENAISSANCE.
LIKE THE SOUTH AFRICAN PRESIDENT, THE AFRICAN RENAISSANCE ENVISAGED BY SASOL
ALSO ENCOMPASSES COUNTRIES TO THE NORTH. WITHIN THIS AMBIT SASOL HAS THE
NEW-GENERATION GAS-TO-LIQUIDS (GTL) SYNFUEL VENTURES PLANNED FOR NIGERIA AND
QATAR. SASOL HAS ALSO ENTERED INTO PROMISING GAS EXPLORATION VENTURES IN
MOZAMBIQUE AND IS INVOLVED IN COMPLEMENTARY HYDROCARBON PRODUCTION AND
EXPLORATION PROJECTS IN THE CONGO, GABON AND SOUTH AFRICA.
THE PRESIDENT IS SUPPORTED IN HIS ENDEAVOURS TO BUILD ECONOMIC BRIDGES WITH
OTHER AFRICAN COUNTRIES, WHICH WILL RESULT IN A FRAMEWORK INTO WHICH NORTH,
EAST, CENTRAL AND WEST AFRICAN PARTNERS CAN BE WELCOMED. THE NET RESULT, AND
SASOL'S DESIRE, WILL BE THE UPLIFTMENT OF THE WHOLE OF AFRICA.
NOTABLY, SASOL'S PLANNED INTERNATIONAL SYNFUEL VENTURES ARE ALL
ENVIRONMENT-FRIENDLY IN THAT THE GTL TECHNOLOGY WILL PRECLUDE THE UNDESIRABLE
FLARING OF ASSOCIATED GAS. THIS IS NOT ONLY A WASTE OF ENERGY, BUT ALSO
INCREASES ATMOSPHERIC POLLUTION AT A TIME WHEN THE GLOBAL PRO-ENVIRONMENTAL
PRESSURE GROUPS ARE LOBBYING FOR DRASTIC REDUCTIONS IN HYDROCARBON-BASED
EMISSIONS. THE END PRODUCT OF SASOL'S UNIQUE GTL TECHNOLOGY, THE SLURRY PHASE
DISTILLATE PROCESS, IS A SUPERIOR-QUALITY DIESEL WITH SUBSTANTIALLY REDUCED
LEVELS OF EMISSIONS, SUCH AS SULPHUR, PARTICULATES AND AROMATICS.
YEAR 2000 COMPLIANCE
THE YEAR 2000 PROJECT WAS OFFICIALLY LAUNCHED IN MAY 1997. SEVEN PEOPLE ARE
EMPLOYED ON A FULL-TIME BASIS AND 220 ON A PART-TIME BASIS, TO ENSURE THAT ALL
COMPUTERISED SYSTEMS WILL BE COMPLIANT WITH YEAR 2000 REQUIREMENTS. OUR
OBJECTIVE IS TO HAVE ALL KNOWN NON-COMPLIANT SYSTEMS REPLACED OR UPGRADED BY
SEPTEMBER 1999.
CONCLUSION
MR ANDRE DU TOIT RETIRED AS DIRECTOR IN THE COURSE OF THE YEAR. I THANK HIM FOR
HIS VALUED CONTRIBUTION, NOT ONLY AS DIRECTOR, BUT ALSO AS A KEY MEMBER OF THE
SASOL MANAGEMENT TEAM FOR MORE THAN 17 YEARS. I ALSO THANK ALL OTHER MEMBERS OF
THE SASOL BOARD, ALL MEMBERS OF MANAGEMENT AND EVERY EMPLOYEE FOR THEIR
CONTINUED VALUED SUPPORT, DEDICATION AND ENTERPRISE DURING THE PAST YEAR IN
SUPPORT OF THE GROUP'S VISION AND STRATEGIC GROWTH PLANS. IN ANOTHER
CHALLENGING YEAR YOUR INDIVIDUAL AND TEAM EFFORTS YIELDED PLEASING RESULTS AND
HAVE INSPIRED SASOL TO MEET WHATEVER CHALLENGES LIE AHEAD. I AM CONFIDENT THAT
YOU WILL ALL AGAIN UNITE IN THE 2000 FINANCIAL YEAR TO PROGRESS FURTHER IN
SUPPORT OF SASOL'S BUSINESS OPTIMISATION INITIATIVES AND GLOBALISATION
PROGRAMME.
I ALSO TAKE THIS OPPORTUNITY TO THANK SASOL'S MANY VALUED CUSTOMERS AND
SUPPLIERS ACROSS THE GLOBE FOR THEIR LOYAL SUPPORT. WE LOOK FORWARD TO BEING OF
CONTINUED GOOD SERVICE TO ALL CUSTOMERS AND HOPE THAT WE SHALL AGAIN HAVE THE
PLEASURE OF WORKING TOGETHER IN MORE PROSPEROUS TIMES.
SASOL IS FORTUNATE TO HAVE GLOBALLY COMPETITIVE MANAGEMENT, OPERATIONAL,
RESEARCH AND DEVELOPMENT AND PROJECT MANAGEMENT TEAMS. THESE ARE LEAD BY THE
GROUP EXECUTIVE TEAM THROUGH THE VERY ABLE PIETER COX. TO PIETER AND HIS TEAM,
THE BOARD WOULD LIKE TO PUBLICLY SAY: CONGRATULATIONS ON A JOB WELL DONE.
PDU P KRUGER
CHAIRMAN
1 SEPTEMBER 1999
NOTE: THIS REPORT CONTAINS CERTAIN STATEMENTS ABOUT THE FUTURE THAT MAY NOT
MATERIALISE.
DECLARATION OF DIVIDEND NUMBER 40
NOTICE IS HEREBY GIVEN THAT THE DIRECTORS HAVE DECLARED A FINAL DIVIDEND TO
SHAREHOLDERS OF 86 CENTS PER SHARE (1998 - 82 CENTS PER SHARE) IN RESPECT OF
THE FINANCIAL YEAR ENDED 25 JUNE 1999.
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, 17 SEPTEMBER 1999. CHEQUES WILL BE POSTED ON OR
ABOUT 21 OCTOBER 1999. ELECTRONIC PAYMENT OF THE DIVIDEND WILL TAKE PLACE ON 21
OCTOBER 1999.
NOTICE OF ANY CHANGE OF ADDRESS OF SHAREHOLDERS MUST REACH THE TRANSFER
SECRETARIES, MERCANTILE REGISTRARS LIMITED, PO BOX 1053, JOHANNESBURG, 2000, ON
OR BEFORE 17 SEPTEMBER 1999.
N L JOUBERT
COMPANY SECRETARY
BY ORDER OF THE BOARD
1 SEPTEMBER 1999
THE GROUP'S AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 25 JUNE 1999 ARE AS
FOLLOWS:
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 25 JUNE 1999
CONSOLIDATED INCOME STATEMENT
                                                      GROUP
                                                      YEAR ENDED
                                                      25 JUNE     25 JUNE
                                                      1999        1998
                                                      RM          RM
TURNOVER                                              19 180      16 666
OPERATING PROFIT                                      3 701       3 121
DIVIDENDS RECEIVED                                    4           4
NET INTEREST RECEIVED                                 71          161
NET INCOME BEFORE TAXATION                            3 776       3 286
TAXATION                                              (1 203)     (1 225)
INCOME AFTER TAXATION                                 2 573       2 061
OUTSIDE SHAREHOLDERS' INTEREST                        (32)        (28)
TRANSFER FROM TAX EQUALISATION RESERVE                -           100
EARNINGS ATTRIBUTABLE TO PERMANENT CAPITAL HOLDERS    2 541       2 133
NET DEBENTURE INTEREST                                (62)        (58)
EARNINGS ATTRIBUTABLE TO SHAREHOLDERS                 2 479       2 075
DIVIDENDS                                             (915)       (890)
DEPRECIATION OF AND AMOUNTS WRITTEN OFF FIXED ASSETS  1 405       1 197
UNDILUTED HEADLINE EARNINGS PER SHARE (CENTS)         402         324
UNDILUTED EARNINGS PER SHARE (CENTS)                  409         326
DIVIDENDS PER SHARE (CENTS)                           151         147
CONSOLIDATED BALANCE SHEET
                                                      GROUP
                                                      YEAR ENDED
                                                      25 JUNE      25 JUNE
                                                      1999         1998
                                                      RM           RM
SOURCE OF CAPITAL
SHARE CAPITAL                                         1 543        1 533
DISTRIBUTABLE RESERVES                                13 588       11 492
CONVERTIBLE DEBENTURES                                1 028        1 028
OUTSIDE SHAREHOLDERS' INTEREST                        102          91
LONG-TERM LIABILITIES                                 668          592
DEFERRED TAXATION                                     3 145        3 514
                                                      20 074       18 250
EMPLOYMENT OF CAPITAL
FIXED ASSETS                                          16 048       14 981
OTHER LONG-TERM ASSETS                                908          645
CURRENT ASSETS                                        7 300        7 893
   CASH FUNDS                                         808          2 341
   OTHER CURRENT ASSETS                               6 492        5 552
CURRENT LIABILITIES                                   (3 690)      (3 716)
INTEREST-BEARING SHORT-TERM DEBT                      (492)        (1 553)
                                                      20 074       18 250
NET ASSET VALUE PER SHARE (CENTS)                     2 496        2 151
NUMBER OF ORDINARY SHARES IN ISSUE (MILLION)          606,1        605,5
CAPITAL EXPENDITURE FOR PERIOD (R MILLION)            2 356        2 927
CAPITAL EXPENDITURE AUTHORISED (R MILLION)            2 843        2 481
CONSOLIDATED CASH FLOW STATEMENT
                                                      GROUP
                                                      YEAR ENDED
                                                      25 JUNE      25 JUNE
                                                      1999         1998
                                                      RM           RM
CASH FLOW FROM OPERATIONS                             5 063        4 301
INVESTMENT INCOME                                     384          269
MOVEMENT IN WORKING CAPITAL                           (919)        (318)
CASH GENERATED BY OPERATING ACTIVITIES                4 528        4 252
FINANCE COSTS PAID                                    (309)        (104)
TAXATION PAID                                         (1 105)      (1 211)
CASH AVAILABLE FROM OPERATING ACTIVITIES              3 114        2 937
DISTRIBUTION TO PERMANENT CAPITAL HOLDERS             (980)        (978)
CASH RETAINED FROM OPERATING ACTIVITIES               2 134        1 959
ACQUISITION OF FIXED ASSETS                           (2 356)      (2 927)
OTHER MOVEMENTS                                       (317)        (18)
INCREASE IN FUNDING REQUIREMENTS                      (539)        (986)
SHARE CAPITAL ISSUED                                  10           15
INCREASE/(DECREASE) IN:
   OUTSIDE SHAREHOLDERS' CAPITAL                      (17)         (19)
   LONG-TERM LIABILITIES                              75           (332)
   SHORT-TERM LOANS                                   (1 062)      1 225
DECREASE IN CASH                                      (1 533)      (97)
DIVISIONAL CONTRIBUTION TO OPERATING PROFIT
THE CONTRIBUTION TO THE OPERATING PROFIT OF THE GROUP WAS AS FOLLOWS:
                                                      GROUP
                                                      YEAR ENDED
                                                      25 JUNE       25 JUNE
                                                      1999          1998
                                                      RM            RM
SASOL SYNTHETIC FUELS                                 1 768         1 302
SASOL MINING                                          283           268
SASOL OIL                                             647           517
SASOL CHEMICAL INDUSTRIES                             1 051         1 085
OTHER                                                 (48)          (51)
                                                      3 701         3 121
REGISTERED OFFICE                    TRANSFER SECRETARIES
1 STURDEE AVENUE                     MERCANTILE REGISTRARS LIMITED
ROSEBANK                             FIRST NATIONAL HOUSE
JOHANNESBURG, 2196                   11 DIAGONAL STREET
POBOX 5486                           JOHANNESBURG, 2001
JOHANNESBURG, 2000                   POBOX 1053
WEBSITE HTTP://WWW.SASOL.COM         JOHANNESBURG, 2000
BOARD OF DIRECTORS P DU P KRUGER (CHAIRMAN), PV COX (MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER), LPA DAVIES*, JHFOURIE*, R HAVENSTEIN*, BP CONNELLAN,
E LE R BRADLEY, WAM CLEWLOW, S MONTSI, JE SCHREMPP (GERMAN).  *EXECUTIVE
DIRECTOR



                                        
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