Wrap Text
Reviewed interim financial results for the six months ended 31 December 2016 - SIPBEE
Sasol Inzalo Public Limited (RF)
(Incorporated in the Republic of South Africa)
(Registration number 2007/030646/06)
Sasol Inzalo Public Ordinary Share code: JSE: SIPBEE
Sasol Inzalo Public Ordinary ISIN: ZAE000210050
("Sasol Inzalo Public" or "Company")
Reviewed interim financial results
for the six months ended 31 December 2016
Overview
Performance for the six months ended 31 December 2016
The group recorded a net loss for the six months ended 31 December 2016 of R58 million (2015:
R50 million), resulting in an increase of 16% from the previous year. This was mainly due to a R17 million
increase in finance costs, partly offset by a reduction of R8 million once-off costs incurred for JSE
listing fees in 2015. Finance income remained flat at R248 million due to the fixed dividend received of
R15,40 per share.
The group generated sufficient cash from the dividend received from the investment in Sasol Limited
to fund operating activities, finance costs and to repay long-term debt during the period. Cash
generated by operating activities for the six months ended 31 December 2016 amounted to R140 million
(R137 million for the period ended 31 December 2015 and R260 million for the year ended 30 June 2016).
The investment in Sasol Limited was revalued at the closing market price of R398,90 per Sasol Limited
ordinary share as at 31 December 2016, to a value of R6 417 million (R6 746 million at 31 December
2015 at a closing market price of R419,40 per share and R6 388 million at 30 June 2016 at a closing
market price of R397,19 per share) in line with the group's accounting policy for investment classified as
available-for-sale financial assets.
At 31 December 2016, the group's total liabilities exceeded its total assets by R990 million (31 December
2015: R600 million). Due to the structure of the BEE transaction, the group is regarded as a going
concern despite the negative equity position. Sufficient cash will be generated out of dividends
received from Sasol Limited to pay for the operating expenses as well as preference dividends and
capital repayments on the preference shares which are due in the short term. The A preference shares
are secured by a first right over the Sasol preferred ordinary shares and the B preference shares
are secured by a second right over the Sasol preferred ordinary shares. The C preference shares are
guaranteed by Sasol Limited. At the end of the empowerment period in 2018, the Sasol ordinary shares
remaining after redeeming the preference shares and paying costs may then be distributed to the
black public in proportion to their shareholding. Any shortfall between the value of the investment in
Sasol Limited and the outstanding C preference shares at the end of the transaction will be settled
directly by Sasol Limited in terms of the guarantee issued to the lenders. The directors have made an
assessment of the group's ability to continue as a going concern and there is no reason to believe the
business will not be a going concern in the year ahead.
Key financial highlights
Basic loss per share
(Rand per share)
Dec 15 (3,13)
Dec 16 (3,61)
Cash generated by operating
activities (R million)
Dec 15 137
Dec 16 140
Investment in Sasol Limited
(R million)
Dec 15 6 746
Dec 16 6 417
Net asset value
(R million)
Dec 15 (600)
Dec 16 (990)
How we used our cash
Dec 16 Dec 15
Rm Rm
Finance income received 248 248
Operating activities 1 -
Repayment of capital and finance costs 249 239
(Utilised)/retained from cash brought forward (2) 9
248 248
Repayment of capital and interest
(A preference) R103 million
Repayment of interest
(B preference) R51 million
Repayment of interest
(C preference) R95 million
Subsequent events
There were no events subsequent to 31 December 2016 requiring disclosure.
Change in directors
Ms CK Mokoena resigned as chairman of the Board and independent non-executive director with effect from 31 January 2017.
The Board appointed Ms Z Monnakgotla as interim chairman with effect from 1 February 2017 and chairman with effect from 16 March 2017.
Declaration of cash dividend
Taking into account the current volatile macro-economic environment, the board of directors has seen it
prudent to utilise cash for repayment of financing activities and have concluded that no cash dividend
be declared for the six months ended 31 December 2016 (31 December 2015: Rnil).
On behalf of the board
Zanele Monnakgotla Zola Malinga
Chairman Director
Sasol Inzalo Public Limited (RF)
16 March 2017
Income statement
for the period ended
Half year Half year Full year
31 Dec 16 31 Dec 15 30 Jun 16
Reviewed Reviewed Audited
Rm Rm Rm
Other expenses (7) (16) (17)
Operating loss (7) (16) (17)
Net finance costs (51) (34) (77)
Finance income 248 248 497
Finance costs (299) (282) (574)
Loss before tax (58) (50) (94)
Taxation * * (1)
Loss for period (58) (50) (95)
* nominal amount.
Loss per share Rand Rand Rand
Basic loss per share (3,61) (3,13) (5,91)
Diluted loss per share (3,61) (3,13) (5,91)
Statement of comprehensive income
for the period ended
Half year Half year Full year
31 Dec 16 31 Dec 15 30 Jun 16
Reviewed Reviewed Audited
Rm Rm Rm
Loss for period (58) (50) (95)
Other comprehensive loss, net of tax
Items that can be subsequently reclassified to the income
statement 23 (400) (710)
Fair value of investments available-for-sale 29 (492) (850)
Tax on items that can be subsequently reclassified to the
income statement (6) 92 140
Total comprehensive loss for the period (35) (450) (805)
The interim financial statements are presented on a condensed consolidated basis.
Statement of financial position
at
Half year Half year Full year
31 Dec 16 31 Dec 15 30 Jun 16
Reviewed Reviewed Audited
Rm Rm Rm
Assets
Non-current asset
Investment in security 6 417 6 746 6 388
6 417 6 746 6 388
Current asset
Cash 18 48 20
Total assets 6 435 6 794 6 408
Equity and liabilities
Shareholders' deficit (990) (600) (955)
Total equity (990) (600) (955)
Long-term debt 7 152 7 065 7 101
Deferred tax liability 118 160 112
Non-current liabilities 7 270 7 225 7 213
Short-term debt 144 148 145
Other payables 11 21 5
Current liabilities 155 169 150
Total equity and liabilities 6 435 6 794 6 408
Statement of changes in equity
for the period ended
Half year Half year Full year
31 Dec 16 31 Dec 15 30 Jun 16
Reviewed Reviewed Audited
Rm Rm Rm
Opening balance (955) (150) (150)
Total comprehensive loss for the period (35) (450) (805)
Closing balance (990) (600) (955)
Comprising
Share capital and share premium 371 371 371
Investment fair value reserve 412 698 389
Accumulated loss (1 773) (1 669) (1 715)
Shareholders' deficit (990) (600) (955)
Statement of cash flows
for the period ended
Half year Half year Full year
31 Dec 16 31 Dec 15 30 Jun 16
Reviewed Reviewed Audited
Rm Rm Rm
Cash utilised in operating activities (1) - (17)
Cash flow from operations (7) (16) (17)
Decrease in net working capital 6 16 -
Finance income received 248 248 497
Finance costs paid (107) (111) (219)
Tax paid * * (1)
Cash generated by operating activities 140 137 260
Repayment of capital (142) (128) (288)
Loan raised - - 9
Cash utilised in financing activities (142) (128) (279)
(Decrease)/increase in cash (2) 9 (19)
Cash at beginning of year 20 39 39
Cash at end of period 18 48 20
* nominal amount
Long-term/Short-term debt
The group's borrowing powers is restricted by its memorandum of incorporation.
Interest
rate at Half year Half year Full year
31 Dec 16 31 Dec 16 31 Dec 15 30 Jun 16
Terms of repayment Security % Rm Rm Rm
Secured debt
A preference shares Secured by Sasol
repayable in semi-annual preferred ordinary
instalments ending shares held by the
September 2018 group Fixed 11,10 975 1 074 1 024
Secured by Sasol
B preference preferred ordinary
shares repayable in shares held by the
September 2018 group Fixed 13,30 791 792 791
C preference Secured by a
shares repayable in guarantee from Sasol Variable 68%
September 2018 Limited of prime 5 527 5 356 5 429
Unsecured debt
Sasol Limited
interest-free
loan repayable in
September 2018(1) - 9 - 9
Non-participating
preference share(2) - * * *
Total secured and
unsecured debt 7 302 7 222 7 253
Unamortised loan costs (6) (9) (7)
Total long-term debt 7 296 7 213 7 246
Short-term portion (144) (148) (145)
7 152 7 065 7 101
* Nominal amount
(1) An unsecured interest-free loan was obtained from Sasol Limited for the purpose of paying for costs associated with the listing of the BEE shares of the company on the JSE
Limited's Empowerment Segment on 1 December 2015.
(2) One 'A' ordinary share of R0,01 was issued to Sasol Limited during the period ended 30 June 2008. The rights to this share provide that immediately when any ordinary share
is issued, it is converted to a preference share. As a result of the ordinary shares issued during the year ended 30 June 2009, the share was converted to a preference share.
The preference share will be entitled in the aggregate to a dividend of R1,00 immediately prior to redemption, on 8 September 2018, and to redemption proceeds of R0,01.
Half year Half year Full year
Loss per share 31 Dec 16 31 Dec 15 30 Jun 16
Basic loss per share
Basic loss per share is derived by dividing
loss for the period/year by the weighted
average number of shares.
Weighted average number of shares Number of
shares 16 085 199 16 085 199 16 085 199
Loss for the year Rm (58) (50) (94)
Loss per share Rand per share (3,61) (3,13) (5,91)
Due to the nature of the business, no potential dilution of shares exist and no headline earnings
adjustments have arisen over the last two years.
Basis of preparation
The condensed consolidated interim financial statements for the six months ended 31 December
2016 have been prepared in accordance with International Financial Reporting Standard, IAS 34, Interim
Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, as
well as the requirements of the South African Companies Act, 2008, as amended and the Johannesburg
Stock Exchange Listings Requirements. The condensed consolidated interim financial results were
approved for issue by the Sasol Inzalo Public Limited (RF) board of directors on 16 March 2017.
The condensed consolidated interim financial statements do not include all the disclosure required
for complete annual financial statements prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board. The condensed
consolidated interim financial statements are prepared on a going-concern basis. The Board is
satisfied that the liquidity and solvency of the Company is sufficient to support the current operations
for the next 12 months.
These condensed consolidated interim financial statements have been prepared in accordance with
the historic cost convention except that certain items, including available-for-sale financial assets, are
stated at fair value.
The condensed consolidated interim financial statements are presented in South African rand, which is
Sasol Inzalo Public Limited (RF)'s functional and presentation currency.
The condensed consolidated interim financial statements appearing in this announcement are
the responsibility of the directors. The directors take full responsibility for the preparation of the
condensed consolidated interim financial statements.
Dashni Sinivasan CA(SA), Senior Manager Finance at Sasol South Africa Proprietary Limited, is
responsible for this set of condensed consolidated interim financial statements and has supervised the
preparation thereof in conjunction with Loyd Matsilele CA(SA), Manager Finance at Sasol South Africa
Proprietary Limited.
Accounting policies
The accounting policies applied in the preparation of these condensed consolidated interim financial
statements are in terms of IFRS and are consistent with those applied in the consolidated annual
financial statements for the year ended 30 June 2016.
Related party transactions
The group, in the ordinary course of business, entered into various transactions on an arm's length
basis at market rates with its related party.
Significant financial instruments
Fair value
Fair value is determined using valuation techniques as outlined below. Where possible, inputs are based
on quoted prices and other market determined variables.
Fair value hierarchy
The following table is provided representing the significant financial instruments measured at fair
value at reporting date, or for which fair value is disclosed at 31 December 2016. The calculation of fair
value requires various inputs into the valuation methodologies used. The source of the inputs used
affects the reliability and accuracy of the valuations. Significant inputs have been classified into the
hierarchical levels in line with IFRS 13, as shown below:
Level 1 Quoted prices in active markets for identical assets or liabilities.
Level 3 Inputs other than quoted prices that are unobservable for the asset or liability (directly or indirectly).
IFRS 13 Carrying Fair
fair value value value Valuation
Instrument hierarchy Rm Rm method Significant inputs
Investment in Level 1 6 417 6 417 Fair value Quoted market price for
security-measured identical instruments
at fair value
Long-term debt Level 3 7 296 7 237 Discounted Inputs for the asset/liability
cash flow that are unobservable
Independent auditor's report on the
condensed consolidated interim financial statements
To the Shareholders of Sasol Inzalo Public Limited (RF)
We have reviewed the condensed consolidated interim financial statements of Sasol Inzalo Public
Limited (RF) in the accompanying interim financial results, which comprise the condensed consolidated
statement of financial position as at 31 December 2016 and the related condensed consolidated income
statement and statements of comprehensive income, changes in equity and cash flows for the six
months then ended, and selected explanatory notes.
Directors' responsibility for the interim financial statements
The directors are responsible for the preparation and presentation of these interim financial
statements in accordance with the International Financial Reporting Standard, IAS 34, Interim Financial
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Pronouncements as issued by the Financial Reporting Standards Council and the
requirements of the Companies Act of South Africa, and for such internal control as the directors
determine is necessary to enable the preparation of interim financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express a conclusion on these interim financial statements. We conducted our
review in accordance with International Standard on Review Engagements 2410, Review of Interim
Financial Information Performed by the Independent Auditor of the Entity. ISRE 2410 requires us to
conclude whether anything has come to our attention that causes us to believe that the interim
financial statements are not prepared in all material respects in accordance with the applicable financial
reporting framework. This standard also requires us to comply with relevant ethical requirements.
A review of interim financial statements in accordance with ISRE 2410 is a limited assurance
engagement. We perform procedures, primarily consisting of making inquiries of management
and others within the entity, as appropriate, and applying analytical procedures, and evaluate the
evidence obtained.
The procedures in a review are substantially less than and differ in nature from those performed in
an audit conducted in accordance with International Standards on Auditing. Accordingly, we do not
express an audit opinion on these interim financial statements.
Emphasis of matter
Without qualifying our opinion, we draw attention to the inside front cover to the interim financial
statements which indicates that the group incurred a net loss of R58 million for the six months
ended 31 December 2016 and, as at that date, the group's total liabilities exceeded its total assets
by R990 million, rendering the company technically insolvent. Pages 7 and 8 also detail plans in
place by management to ensure that the company is able to continue as a going concern in the
foreseeable future.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the
accompanying condensed consolidated interim financial statements of Sasol Inzalo Public Limited
(RF) for the six months ended 31 December 2016 are not prepared, in all material respects, in
accordance with the International Financial Reporting Standard, IAS 34, Interim Financial Reporting,
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the
Companies Act of South Africa.
PricewaterhouseCoopers Inc.
Director: PC Hough
Registered Auditor
Sunninghill
16 March 2017
Registered office: Sasol Place, 50 Katherine Street, Sandton, Johannesburg 2196
PO Box 5486, Johannesburg 2000, South Africa
Share registrars: Computershare Investor Services Proprietary Limited, Rosebank Towers,
15 Biermann Avenue, Rosebank 2196, South Africa
PO Box 61051, Marshalltown 2107, South Africa
Tel: +27 11 370 5000 Fax: +27 11 370 5271/2
Information helpline: 0800 000 222
Email: sasolinzalo@computershare.co.za
JSE Sponsor: Deutsche Securities (SA) Proprietary Limited
Directors (Non-executive): Ms Z Monnakgotla (Chairman), Ms TB Boikhutso, Ms A Haroon,
Dr S Koyana, Ms N Manyika, Ms ZN Malinga, Ms K Njobe
Company secretary: Sasol South Africa Proprietary Limited
Company registration number: 2007/030646/06, incorporated in the Republic of South Africa
Income tax reference number: 9261678164
Sasol Inzalo Ordinary shares
Share code: SIPBEE
ISIN: ZAE000210050
17 March 2017
Johannesburg
Sponsor: Deutsche Securities (SA) Proprietary Limited
www.sasolinzalo.com
Date: 17/03/2017 08:52:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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