SASOL LIMITED - Sasols Response to Covid-19 Lock Down in SA; Credit Rating and Oil Hedging Update, and Cautionary Statement

Sasol’s Response to Covid-19 Lock Down in SA; Credit Rating and Oil Hedging Update, and Cautionary Statement

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” or “Company”)

SASOL’S RESPONSE TO COVID-19 LOCK DOWN IN SOUTH AFRICA;
CREDIT RATING AND OIL HEDGING UPDATE, AND CAUTIONARY
STATEMENT

SASOL’S RESPONSE TO COVID-19 MEASURES

Sasol welcomes and fully supports the directives announced by South African
President Cyril Ramaphosa on 23 March 2020, to combat the spread of COVID-19
in South Africa, including a three-week country-wide lockdown (“the COVID-19
directives”), which effectively commenced on Friday, 27 March 2020 and will
continue until Friday, 17 April 2020.

In South Africa, Sasol’s products and services, by and large, are classified as
essential goods and services as per Annexure B of the Lockdown Regulations
issued by the Minister of Cooperative Governance and Traditional Affairs on 25
March 2020. Sasol plans to run its South African-based operations for the duration
of the lockdown, and will work with the Government to ensure business continuity
and uninterrupted supply of fuels and chemicals in South Africa during this period.
However, some plants will be required to reduce throughput, or potentially
shutdown following lower product offtake by our customers due to the lockdown.
Furthermore, some intermediate chemicals will be re-directed to the production of
products where demand is not impacted, to the extent possible. To this end, Sasol
has formulated a special blend of alcohols to address the increasing demand for
sanitizer alcohols, and will expedite the production and availability of these critical
products locally to help safeguard the health and wellbeing of South Africans.

Sasol is collaborating with the South African Department of Trade, Industry and
Competition (DTIC) and is also prioritising supply to Government entities and other
essential services to jointly combat the spread of the virus in South Africa.

The health and wellbeing of employees remains Sasol’s foremost priority and
appropriate measures have already been taken to mitigate the risk of COVID-19
infection across all of Sasol’s sites. These measures are being strictly enforced
and closely monitored to ensure the ongoing safety of employees and the public.

Outside of South Africa, most of Sasol’s operations are continuing, with no
significant impacts to North American Operations (NAO) or its supply chain, or to
the Lake Charles Chemicals Project (LCCP) construction to date. Chemical
manufacturing is defined as a critical infrastructure sector, and therefore NAO and
the LCCP is exempt from the stay-at-home order issued by the Louisiana
government.

All European and Asian assets are currently in operation. The Central Processing
Facility (CPF) in Temane, Mozambique, which supplies natural gas to
Mozambique and South Africa is not affected. Sasol continues to work closely with
suppliers and customers to ensure uninterrupted supply, where possible.

The COVID-19 situation is highly dynamic and with infection rates continuing to
increase in many countries, there is a risk of interruptions to production,
construction and associated supply chains, along with a potential impact on
demand and product pricing in some sectors. Shareholders are therefore advised
that this could impact Sasol’s earnings for 2020 financial year (FY20). The impact
on the business, suppliers and customers is being continuously evaluated and an
update will be provided in the Q3 FY20 Business Performance Metrics report.

UPDATE ON CREDIT RATING AND OIL HEDGING

Sasol notes that the credit rating agencies, S&P Global Ratings (S&P) and
Moody’s have updated their credit rating assessments of Sasol in light of the
impact of the COVID-19 pandemic on global growth and the volatility in the oil
price. S&P has announced that it has revised Sasol’s BBB- rating, which was
affirmed on 7 March to BB, with a negative outlook, while Moody’s also announced
that it has revised Sasol’s Ba1 rating to Ba2 and placed the company under review
for a downgrade. Moody’s stated that “South Africa’s 21-day lockdown to contain
the outbreak creates further uncertainty on near-term financial performance, while
an extended lockdown beyond the original timeline could further affect
performance”. The cost of some of Sasol’s floating rate debt is partly linked to our
credit rating and the revised rating profile will therefore result in an increase in
finance costs from existing facilities of approximately US$10 million per annum.

As stated in the market update on 17 March 2020, Sasol has developed a
comprehensive response strategy, which is being executed to mitigate the impact
of COVID-19 and a lower oil price as far as practically possible. This includes a
cash conservation programme, an accelerated and expanded asset disposal and
partnering programme, as well as a potential rights issue of up to US$2 billion,
which remains subject to the progress of other initiatives. Sasol maintains a long-
term commitment to achieving an investment grade credit rating.

Further to this, progress has been made on Sasol’s hedging programme reducing
Sasol’s exposure to any further short term pricing downside. Oil hedges are in
place for approximately 80% of Synfuels fuels Q4 FY20 production, at
approximately US$32 per barrel. Crude oil hedging execution will continue for the
next 12 months, while US$/ZAR and ethane hedging programmes have been
executed for the next twelve month period.

Sasol continues to have liquidity of approximately US$2,5 billion to provide an
additional buffer against short term volatility.

Fleetwood Grobler commented “This is an unprecedented time in the history of
Sasol and the world. We will continue to take decisive action to help safeguard the
health and well-being of our employees and provide essential products to the
many stakeholders that rely on us, while we reposition the business to enhance its
long term future.”

Shareholders are advised to continue to exercise caution when dealing in the
Company’s securities until a further announcement is made.

31 March 2020
Johannesburg

Sponsor: Merrill Lynch South Africa Proprietary Limited


Disclaimer - 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, expectations, developments and business
strategies. Examples of such forward-looking statements include, but are not
limited to, statements regarding exchange rate fluctuations, expectations regarding
future cash flow, Sasol’s ability to meet its debt covenants, Sasol’s ability to
achieve the cost savings or complete its asset disposal programme, the actions
referred to herein intended to strengthen Sasol’s balance sheet and to maintain
profitability at lower oil prices and business performance outlook. Words such as
“believe”, “anticipate”, “expect”, “intend", “seek”, “will”, “plan”, “could”, “may”,
“endeavour”, “target”, “forecast” 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. You are accordingly advised to exercise caution when trading
in the Company’s securities until such time the full details of the disposal and the
rights offer are published. These factors and others are discussed more fully in our
most recent annual report on Form 20-F filed on 28 October 2019 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.

Date: 31-03-2020 08:00:00
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