(Incorporated in South Africa)

(Registration number: 1979/003231/06) 

ISIN Code: ZAE000006896 

Share Code: SOL 

NYSE Code: SSL

("Sasol" or "the Company")

 

 

On 1 March 2001, Sasol acquired Condea from RWE Dea for a purchase consideration of €1 295 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 20% to 25% 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

Issued on the JSE's Stock Exchnage News Services (SENS)