Page 16 - AfrOil Week 33 2021

AfrOil
NEWS IN BRIEF
AfrOil
Under a contract with Dragon Oil (GUPCO), Fugro delivered subsea positioning support for the installation of multiple subsea structures off the coast of Egypt. To meet the requirements for improved safety and lower project costs, Fugro deployed their QuickVision solution. This state- of-the art vision technology uses a smart camera, attached to a remotely operated vehicle, that can determine the heading and attitude of a sub- sea structure as it is landed. This eliminates the requirement to pre-install a sensor package on the structure, and retrieve it once installation is complete, which reduces the time and costs asso- ciated with a dive support vessel.
Noting the benefits that real-time access to the positioning Geo-data brought to the project, Fugro’s Project Manager, Sherif Abd El Aziz, said: “Introducing the power of augmented real- ity has had a hugely positive impact on this pro- ject’s delivery.”
Lotfi Ibrahim, Drilling Operation Manager for Dragon Oil (GUPCO), added: “The conven- tional sensor method is time-consuming and is not without risk. Fugro’s QuickVision allowed us to deliver safer and more sustainable operations, and within the desired accuracy. It has revolu- tionised our subsea installation programmes.” Fugro, August 11 2021
PERFORMANCE
Sasol delivers strong results for latest fiscal year
Sasol delivered a strong set of results for the year ended June 30, 2021. Our earnings before interest and tax (EBIT) of ZAR16.6bn increased by more than 100% compared to the prior year. This performance was underpinned by a strong cost, working capital and capital expenditure performance, despite the continued impact of the COVID-19 pandemic and adverse weather
events.
A notable gross margin recovery was
recorded in the second half of the financial year, supported by the combined impact of higher Brent crude oil and chemicals prices, offset by a stronger rand/US dollar exchange rate.
Our earnings were mainly impacted by the following non-cash adjustments, the net of which amounted to ZAR15.4bn: Net impair- ments of ZAR28.,7bn mainly due to adjust- ments to our long-term exchange rate outlook and higher cost to procure gas over the longer term; Net profit on disposal of businesses of ZAR2.2bn, including the Air Separation Units; ZAR3.4bn gain on the realisation of the foreign currency translation reserve (FCTR), mainly on the divestment of a 50% interest in the LCCP Base Chemicals business; Gains of ZAR5,5bn on the translation of monetary assets and liabil- ities due to a 18% strengthening of the closing rand/US dollar exchange rate compared to June 2020; and Gains of ZAR2.3bn on the valuation of financial instruments and derivative contracts.
Balance sheet management: Cash gener- ated by operating activities increased by 6% to ZAR45.1bn compared to the prior year. This, together with the asset divestment programme, enabled the repayment of approximately ZAR81bn of debt, including the settlement of our rand-denominated banking facilities of approximately ZAR4bn.
Actual capital expenditure amounted to ZAR16.4bn, compared to ZAR35.2bn during 2020. The reduction in capital expenditure was carefully executed as a result of our optimised risk management focus whilst ensuring asset integrity and safety were not compromised.
Our net debt-to-EBITDA ratio at June 30, 2021, based on the revolving credit facility (RCF) and US dollar term loan covenant definition, was 1.5 times, significantly below the agreed thresh- old level. Although this ratio meets our targeted net debt to EBITDA level, we will continue with our efforts to reduce leverage and absolute debt
levels further. This will create valuable financial flexibility as we execute our Future Sasol strat- egy in the midst of an uncertain macroeconomic environment. Our objective remains to steer the balance sheet metrics toward restoration of our investment grade levels.
During the year, bonds of $1.5bn (ZAR21.4bn) were issued and listed on the New York Stock Exchange. At June 30, 2021, our total debt was ZAR102.9bn, compared to ZAR189.7bn at June 30, 2020. During the year, we utilised proceeds from our asset divestments to repay the US dollar syndicated loan, a portion of our RCF and term loans, reducing our US dollar denominated debt by almost ZAR76bn ($5bn). Our gearing decreased from 117.0% at June 30, 2020, to 61.5% at June 30, 2021, mainly due to repayment of US dollar debt and a stronger closing rand/US dollar exchange rate.
As at June 30, 2021, our liquidity headroom was ZAR84bn ($5,9bn), well above our out- look to maintain liquidity in excess of $1bn, with available rand and US dollar-based funds improving as we advance our focused man- agement actions. We have no significant debt maturities before November 2022, when the $1bn bond becomes due. In line with our finan- cial risk management framework, we continue to make good progress with hedging our for- eign currency, crude oil and ethane exposure. We have been successful in hedging our total oil exposure for 2022 which increases the certainty of future cash flows to reduce debt levels and enable us to execute on our Future Sasol strategy.
Dividend: The restoration of dividends is a key priority, but in the context of the high level of macroeconomic uncertainty the Board believes it is prudent not to declare a dividend at this stage.
Changes in Directors: The following change to the Board occurred after the publication of the Company’s interim financial results on February 22, 2021: S. Subramoney was appointed as inde- pendent non-executive director and member of the Audit Committee with effect from March 1, 2021.
The Company announced the appointment of GMB Kennealy, an independent non-exec- utive director, as Chairman of the Audit Com- mittee effective September 1, 2021, upon the retirement of C. Beggs as independent non-exec- utive director and Chairman of the Audit Com- mittee on August 31, 2021.
P. Victor has informed the Company that he will step down as Chief Financial Officer (CFO) and executive director of Sasol Ltd on June 30, 2022. H. Rossouw has been appointed as CFO-designate and executive director-designate of Sasol to succeed Victor. He will join Sasol on April 4, 2022, and will succeed Victor as execu- tive director and CFO on July 1, 2022.
Sasol, August 16 2021
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Week 33 18•August•2021