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SOL
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Sasol announces improvement in headline earnings forecast for financial year
Sasol Limited
(Incorporated in South Africa)
(Registration number: 1979/003231/06)
ISIN Code: ZAE000006896
Share Code: SOL
NYSE Code: SSL
("Sasol" or "the Company")
SASOL ANNOUNCES IMPROVEMENT IN HEADLINE EARNINGS FORECAST FOR FINANCIAL YEAR
ENDED 30 JUNE 2006 AND WRITE-DOWN TO FAIR VALUE OF SASOL OLEFINS AND SURFACTANTS
On 1 March 2001, Sasol acquired Condea from RWE Dea for a purchase consideration
of Euro1 295 million. The business, also including thereafter certain existing
Sasol assets in South Africa, was subsequently named Sasol Olefins and
Surfactants (O&S). At the time, the long-term view of oil prices held by leading
reputable agencies and banks was about US$20,00/b. At this price, the margins of
the business were considered to be robust and sustainable going forward.
On 1 August 2005, Sasol announced its intention to consider the divestiture of
the O&S business subject to fair value being received. Thereafter, substantial
work was undertaken to prepare the business for sale and the bidding and
divestiture processes are far advanced.
When the proposed divestiture process was initiated last year, prevailing
international oil prices had risen by 125% to about US$45,00/b. Since then,
these have increased further by 55% to about US$70,00/b. In other words,
international oil prices are currently 250% higher than when the business was
acquired. Long-term oil price forecasts by reputable agencies and leading banks
have also increased significantly. These increases represent fundamental changes
in energy costs and their related impact on oil-derivative feedstock costs. In
turn, these have depressed the operating performance of O&S and, as a result,
have reduced the potential value of the business.
The strategic rationale for considering the disposal of the business remains
valid and relevant. It is not vertically integrated to Sasol"s required
standards and is not adequately linked to our proprietary Fischer-Tropsch
technology processes. The financial impact of changes in the input costs of the
business - together with current market-place dynamics - exceeds the benefits of
significant reductions that have successfully been achieved in the fixed costs
of the business and various other productivity improvements. After a review of
valuations and bids received from interested parties, which confirm Sasol"s
valuation, it is necessary in accordance with International Financial Reporting
Standards (IFRS) 5 ( non - current assets held for sale and discontinued
operations ) to write-down the net asset value of the business to its fair
value.
This results in a reduction of net asset value and a charge to the income
statement in the financial statements ended 30 June 2006 of about R2,8 billion,
after tax. This write-down results in a reduction in attributable earnings per
share which are nevertheless still expected to increase by between 5% and 10%
over the comparable result of the previous financial year. Headline earnings per
share are expected to increase by between 30% and 35%, which compares with the
25% to 30% range announced in the trading statement issued on 2 June 2006.
The cash position of the group is not affected by the write-down and based on
current assumptions it is not anticipated, therefore, that there will be any
effect on current or future dividends. Negotiations will be entered into with
prospective new owners in the coming months and, if a divestiture materializes,
our gearing will obviously benefit from the cash proceeds. The cash proceeds
will contribute to the funding of the exciting international gas-to-liquid (GTL)
and coal-to-liquid (CTL) plans that Sasol is considering in various countries,
and which are considered to be core to Sasol"s future growth ambitions.
Sasol"s financial results for the year ended 30 June 2006 will be announced on
Tuesday, 12 September 2006.
The above information has not been reviewed and reported on by the company"s
auditors.
Johannesburg
5 September 2006
Issued by sponsor: Deutsche Securities (SA) (Proprietary) Limited
Forward looking statements
We may in this document make statements that are not historical facts and relate
to analyses and other information based on forecasts of future results and
estimates of amounts not yet determinable. These are forward-looking statements
as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words
such as "believe", "anticipate", "expect", "intend", "seek", "will", "plan",
"could", "may", "endeavour" 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 predictions, forecasts, projections and other forward-looking
statements will not be achieved. If one or more of these risks materialize, or
should underlying assumptions prove incorrect, actual results may be very
different from those anticipated. The factors that could cause our actual
results to differ materially from the plans, objectives, expectations, estimates
and intentions expressed in such forward-looking statements are discussed more
fully in our annual report under the Securities Exchange Act of 1934 on Form 20-
F filed on October 26, 2005 and in other filings with the United States
Securities and Exchange Commission. 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: 05/09/2006 03:17:07 PM Produced by the JSE SENS Department
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