Sasol Limited has announced financial results for the year ended June 30th 2010. Highlights are as follows:
Earnings per share up by 17% to ZAR 26.68
Synfuels volumes up by 3.9%
Cash fixed costs reduced
Strong cash flows generated from operating activities
Total dividend up by 24% to ZAR 10.50 per share
Strong balance sheet to fund growth
Growth projects remain on track
Mr Pat Davies CEO of Sasol said that "Sasol continued to deliver on its strategy by focusing on world class performance of our existing assets and progressing growth opportunities that are based on our proprietary technology. The prompt actions taken in response to the global economic crisis, though painful, have resulted in a more efficient and effective organization. Our financial position is strong and we have the flexibility to pursue our sustainable growth strategy with vigor. Our focus remains on optimizing our businesses, leveraging our technology and investing strategically to enhance shareholder returns on a sustainable basis."
Earnings attributable to shareholders for the year ended June 30th 2010 increased by 17% from ZAR 13.6 billion in the previous financial year to ZAR 15.9 billion, while earnings per share and headline earnings per share increased by 17% to ZAR 26.68 and by 5% to ZAR 26.57, respectively, over the same period.
Operating profit of ZAR 23.9 billion declined marginally by 3% compared with the previous financial year. Operating profit was positively impacted by improved production volumes, higher average crude oil prices and chemical product prices. A 16% stronger average rand US dollar exchange rate, however, outweighed the benefits realized from the oil price. The average crude oil price achieved during the previous financial year was positively impacted by the effect of the oil hedges which resulted in a net gain of ZAR 5.1 billion. Similar oil hedges were not entered into during the financial year under review.
The operating profit in 2010 was not affected by large once off charges compared with the previous financial year. The previous year's once off charges included competition related administrative penalties of ZAR 3.9 billion and Sasol Inzalo share based payment expenses of ZAR 3.2 billion. The 2010 financial year includes a much lower Sasol Inzalo share based payment expense of ZAR 824 million.
The decrease in the effective tax rate is as a result of the absence of competition related administrative penalties and lower share based payment expenses compared with the prior year, both of which are not deductible for tax. Cash flow from operating activities was ZAR 27.3 billion compared with ZAR 48.2 billion of the previous year. While cash flow generated by the existing businesses was strong, working capital increased from a working capital ratio of 15.3% as compared with the previous year's ratio of 11.2% as a result of price and volume effects. The group's growth plans remained on track during the 2010 financial year, resulting in capital expenditure of ZAR 16.1 billion for the year.
Mr Christine Ramon CFO of Sasol said that "Our dedicated focus on operational efficiency, while maintaining strict cost discipline, has delivered results. We have been able to achieve cash fixed costs savings of ZAR 1 billion for the year, resulting in a reduction in cash fixed costs. The initiatives we have embarked on support the focus of our businesses to deliver sustainable performance through the cycles. Our growth plans remain on track and we will actively pursue our capital investment opportunities in the forthcoming year, where we estimate capital expenditure to be in the region of ZAR 19 billion. We continue to plan carefully for an economic recovery, albeit volatile. The strength of our balance sheet and healthy cash flows position us well to respond to opportunities and challenges that the current environment presents."
