Sasol Integrated Report 2022 - Book - Page 19
INTRODUCTION | ABOUT SASOL
STRATEGIC OVERVIEW
CREATING VALUE
DELIVERING
GOVERNANCE AND REWARDS
ADMINISTRATION
CHIEF FINANCIAL OFFICER’S STATEMENT
W
e believe Sasol can make a significant
global contribution to innovating for a
better world.
Dear stakeholders
The past financial year saw significant volatility, with
businesses across the world facing uncertainty from
the ongoing impact of COVID-19, global supply chain
disruption and the Russia/Ukraine conflict. Sasol was
also materially impacted by these factors.
Hanré Rossouw
Chief Financial Officer
KEY MESSAGES
Strategic divestments successfully concluded
Climate change delivery framework
Continued delivery of Sasol 2.0
Disciplined capital allocation
We can look ahead with renewed confidence supported by a strengthened
balance sheet and strong liquidity.
Operational challenges, particularly experienced in
the first half of the financial year, led to lower
volumes, but there was a strong overall outcome
with improved financial performance alongside
higher Brent crude oil, refining margins and chemical
prices. This financial performance was enhanced by
realisation of asset divestment proceeds resulting in
a stronger balance sheet and proactive management
of the headwinds ensuring efficiency and
effectiveness of the business. In this context Sasol
can look ahead to FY23 with renewed confidence and
therefore approved the reinstatement of the
dividend.
Strong financial performance
Improved
profitability
Strengthened
balance sheet
R72bn adjusted
US$3,8bn
EBITDA*
*
net debt**
Dividend
restored
1 470 cents
per ordinary share
Self-funded
transition
R15 – 25bn
capital delivering
2030 target
Adjusted EBITDA is calculated by adjusting earnings before interest and tax for depreciation, amortisation, share-based payments, remeasurement items,
change in discount rates of environmental provisions, all unrealised translation gains and losses on our derivatives and hedging activities.
** Total debt excluding leases less cash and cash equivalents.
During the year, the pricing environment for Sasol’s
key products and increased demand were offset by
operational challenges faced at our South African
operations where coal quality and supply were
constrained and resulted in lower production.
Operations in the South African value chain stabilised
during the second half of the year and largely achieved
their revised operating plans. Adjusted earnings
before interest, tax, depreciation and amortisation
(Adjusted EBITDA) increased by 48% to R71,8 billion.
Cash fixed costs increased by 2% compared to the
prior year, to R62,1 billion. The increase in cost is
underpinned by higher labour and maintenance cost,
as well as increased electricity purchases from
SASOL INTEGRATED REPORT 2022
18
Eskom arising from the diversion of gas from utility
generation to production, offset by savings from
Sasol 2.0 initiatives. The ongoing recovery and
stabilisation of the South African value chain remains
a key focus area for FY23, with specific focus on
security of quantity and quality of coal supply,
as well as gas supply from Mozambique.
Further balance sheet strengthening was achieved
through realisation of asset divestments alongside
stronger operating cash flows. At 30 June 2022,
our total debt was R105,1 billion (US$6,5 billion)
compared to R102,9 billion (US$7,2 billion) at
30 June 2021, and our liquidity headroom was
R100,7 billion (US$6,2 billion), consistent with
our objective to maintain liquidity in excess of
US$1 billion. Our net debt** at period end was
US$3,8 billion excluding leases while the net debt
to EBITDA (bank definition) at 30 June 2022 was
0,8 times, significantly below the covenant threshold
level of three times.
At the start of the period, protection of downside
risk for the balance sheet was a key priority for
the company with elevated leverage and a volatile
macroeconomic environment. The hedging
programme was therefore in place to mitigate
the risk of adverse movements in oil price, ethane
price and currency. As a result of unexpected pricing
strength, the hedging programme resulted in
significant losses – R18,3 billion in this period.
The hedging programme is updated regularly to
address changes in our commodity and currency
exposure. The balance sheet has significantly
deleveraged and we are reducing the hedge cover
ratio as our balance sheet strengthens further.
