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Sasol to receive largest air separation unit
Business Day reports that Sasol will receive a EUR200 million investment from Paris based group Air Liquide for the construction of an air separation unit (ASU), the largest ever build, for producing up to 5000 tonnes of oxygen per day. The ASU is expected to be commissioned by end of 2017. Air Liquide will build, design, operate and own the ASU that will be used to produce synthetic fuels at Sasol's Secunda site. Sasol CEO David Constable said, " Air Liquide is a long-term technology partner of Sasol. The implementation and operation of this new large ASU bring world-class expertise to our Secunda site and guarantee a long-term reliable and competitive source of oxygen,".
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Sasol-change to dividend policy and segment report
In response to the current low oil price environment, an initiative to conserve cash over the next 30 months was announced by Sasol on 28 January 2015 (“Response Plan”).
Sasol’s Response Plan comprises 5 key components, namely:
- capital portfolio phasing and reductions;
- capital structuring;
- working capital improvements;
- margin enhancement; and
- further cash cost reductions, supplementing the Group’s target of at least R4 billion annual costs savings driven through the company-wide business performance enhancement programme, which was launched in 2013.
Looking specifically at the capital structuring lever, the management team and the Sasol board of directors (“Board”) evaluated the Company’s progressive dividend policy, which had been introduced to maintain or improve dividends in line with the Company’s anticipated sustainable growth in earnings. The Company’s dividend policy takes into consideration various factors, including overall market and economic conditions, the Group’s financial position, capital investment plans as well as earnings growth.
In the context of a low oil price environment, the Group’s earnings will be negatively impacted. The current macroeconomic conditions have therefore necessitated a reassessment of the Company’s progressive dividend policy. At a special meeting of the Sasol Board, the directors approved a change in the Company’s dividend policy. The revised policy is based on a dividend cover range, which will be similar to the dividend cover rates applied during the 2008 to 2014 financial years.
The Board considers that, in the current environment, this revised dividend policy, together with the other components of the Response Plan, will provide sufficient flexibility for the Company to manage its balance sheet. This will also allow the Group to execute its growth programme while continuing to return value to shareholders through dividend payouts. Another important component of the Company’s Response Plan efforts is the ongoing refinement of its operating model, and the further optimisation of its management structures to ensure greater focus and efficiency while enabling additional cost reductions.
To this end, earlier this month, Sasol announced changes to its top management structures. The Company has also decided to combine two of its reportable segments, Southern Africa Energy and International Energy, and their associated management structures, into one segment, now called Energy. Given this decision, Sasol’s segmental reporting will now consist of six reportable segments: Mining, Exploration and Production International, Energy, Base Chemicals, Performance Chemicals, and Group Functional
Support.
Sasol will be announcing its results for the first half of the 2015 financial year on 9 March 2015. The interim dividend will be announced at the same time, and the segment information contained in these results will be disclosed on this revised basis.
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Sasol top management optimised structure
Sasol announced a change in the executive responsibilities of executive director, Ms V N Fakude, who currently has accountability for the Sustainability and Human Resources portfolio, and the soon to be appointed executive director, Mr B Nqwababa, who will be joining Sasol as its new Chief Financial Officer on 1 March 2015. The portfolio changes will be effective from 1 March 2015 and are pursuant to Sasol’s announcement to further optimise its top management structure.
With the retirement of Mr E Oberholster, as Executive Vice President: Strategy, Development and Planning, and as part of the company’s ongoing drive to enhance its structures and business processes, Sasol has decided not to appoint a new Group Executive Committee (GEC) member to assume responsibility for Mr Oberholster’s portfolio. Instead, these accountabilities will be reallocated to current members of the GEC.
Given the reallocation:
- Ms Fakude will be directly accountable for the Strategy and Sustainability portfolio comprising the following Group functions: Strategy; Risk & Safety, Health and Environment; and Human Resources. Ms Fakude will relinquish the South Africa Shared Services and Public & Regulatory Affairs functions, which will be assumed by other members of the GEC.
- Mr Nqwababa will be directly accountable for the Finance portfolio, comprising the following Group functions: Financial Control; Corporate Finance, Business Development and Portfolio Management; Investor Relations and Information Management.
On 28 January 2015, Sasol confirmed that it is formulating a comprehensive plan to respond to the current low oil price environment. The further optimisation of its top management structure is an important step in the company’s response plan efforts, ensuring that the organisation is much more focused and cost-conscious.
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Sasol release trading statement
Sasol’s headline earnings per share (HEPS) for the six months ended 31 December 2014 is expected to increase by between 3% and 9% (approximating R0.91 to R2.72) and earnings per share (EPS) for the same period is expected to increase by between 51% and 57% (approximating R10.65 to R11.90), off a 2014 half year base of R30,19 and R20,88 respectively. Excluding the impact of notable once-off items, net impairments charges, stock movements and the share-based payment expense, EPS would have decreased by between 21% and 27%.
Sasol’s profitability for the first half of the 2015 financial year was positively impacted by the following factors:
• A solid operational performance through increases in production and sales volumes across the majority of Sasol’s integrated value chain;
• Normalised cash fixed costs continue to trend below inflation;
• 9% weaker average rand/US dollar exchange rate;
• Notable once-off charges prompted by volatile macro-economic factors, changes to the share price and decisive management actions:
• Reversal of share-based payment expense of R2.5 billion due to a 32% lower share price;
• Positive impact arising from the movement in unrealised profit in inventory of approximately R2 billion at period end;
• Net impairments of R0.2 billion for the six months under review compared to the comparable period of R6 billion, which included the R5.3 billion partial impairment of Sasol's Canadian shale gas assets; and
• Extension of the useful life of Sasol's Southern African operations amounting to R2.5 billion.
Sasol's financial results for the six months ended 31 December 2014 will be announced on Monday, 9 March 2015.
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Sasol hosts an investor visit to the US
Sasol hosted an investor visit to its US ethane cracker and derivatives project
Sasol hosted analysts and investors at its Westlake facility in Lake Charles, Louisiana on Monday, 2 February 2015.
On 27 October 2014, the company announced that it had taken a final investment decision to construct an USD8.1 billion ethane cracker and derivatives complex at its existing site in Lake Charles, Louisiana.
Once commissioned, this world-scale petrochemicals complex will roughly triple Sasol’s chemical production capacity in the United States, enabling Sasol to further strengthen its position in a growing global chemicals market. The U.S. Gulf Coast’s robust infrastructure for transporting and storing abundant, low-cost ethane was a key driver in the decision to invest in America.
Sasol announced that it is developing a comprehensive plan to respond to the current low oil price environment. At the same time, the company confirmed that the construction of the cracker and derivatives complex will continue.
Given the robust project economics, the Sasol team is confident that this facility is the first step in developing the Louisiana site into an integrated multi-asset, multi-business hub, which will enable future growth for several decades to come.
A supporting presentation and audio webcast will be available on the company’s website at http://www.sasol.com/investor- centre/presentations-and-speeches/us-site-visit and will begin at 10h30 (CST), 18h30 (SA), 16h30 (GMT).
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