South Africa's Sasol delays results due to U.S. project glitch
* Sasol delays 2019 annual results
* Identifies possible "control weaknesses" at U.S. project
* Shares fall to more than 10 year low
(Adds Sasol comment, updates share price)
By Tanisha Heiberg
JOHANNESBURG, Aug 16 (Reuters) - Sasol Ltd delayed
the release of its annual financial results on Friday due to
possible "control weaknesses" at its U.S. ethane cracker
project, sending shares in the chemicals and energy company down
by more than 15%.
Sasol said its auditors would need to consider an
independent report the board had commissioned into its Lake
Charles Chemicals Project (LCCP) and therefore expected to
announce fiscal 2019 results on Sept. 19 instead of Aug. 19.
"Management and the board will assess such control
weaknesses and identify whether any further remedial actions are
required," the company said, without providing further details.
In May, Sasol had increased the expected cost of the U.S.
project by around $1 billion following a review by new
management that revealed oversights such as duplicate credits
and overlooked contracts, adjustments for potential insurance
claims, procurement back-charges and remaining work and repairs.
Sasol spokesman Alex Anderson said the group's financial
controls were sound and it had no concerns about its financial
"This is a situation where a relatively small team, the LCCP
project management team, although working very hard, did not
have adequate segregation of duties and failed to engage the
wider financial organisation to verify the accuracy of their
forecast," Anderson said referring to the cost forecast for the
The company said it had implemented initiatives to improve
decision making, transparency and documentation within the
project management team.
It has also segregated duties between project controls and
finance functions and assigned a senior vice president who is
responsible for the project's controls.
The company said it still expected cost guidance for LCCP to
between $12.6 billion and $12.9 billion but that it now
expected full production at the project to be delayed to around
Aug. 26 from the previous guidance of the end of July after a
technical challenge relating to a large heat exchanger.
The project in Louisiana, which will convert natural gas
into plastics ingredient ethylene, was initially expected to
cost $8.9 billion in 2014 and has seen delays and cost
Sasol, which is delaying its results for the first time,
said it expected guidance given in July - for a rise in annual
core headline earnings per share of between 1% and 11% - to
remain the same.
Headline earnings is the main profit measure used in South
Africa that strips out certain one-off items.
Shares in Sasol, the world's biggest maker of motor fuel
from coal, were down 4.23% to 266.38 rand at 1444 GMT, after
trading as low as 233.93 rand, their lowest since November 2008.
(Reporting by Tanisha Heiberg; Editing by Mark Potter and Jane
First Published: 2019-08-16 09:03:35
Updated 2019-08-16 17:38:47
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