TRANSITIONING TO THE FUTURE SASOL LIMITED FINANCIAL RESULTS for the six months ended 31 December 2016 JSE: SOL NYSE: SSL
Forward-looking statements Sasol may, in this document, make certain statements that are not historical facts and relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies. Examples of such forward-looking statements include, but are not limited to, statements regarding exchange rate fluctuations, volume growth, increases in market share, total shareholder return, executing our growth projects and cost reductions, including in connection with our Business Performance Enhancement Programme and Response Plan. Words such as "believe", "anticipate", "expect", "intend", "seek", "will", "plan", "could", "may", "endeavour", "target", "forecast" 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 the predictions, forecasts, projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. You should understand that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors are discussed more fully in our most recent annual report on Form 20-F filed on 27 September 2016 and in other filings with the United States Securities and Exchange Commission. The list of factors discussed therein is not exhaustive; when relying on forward-looking statements to make investment decisions, you should carefully consider both these factors and other uncertainties and events. 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. Please note: A billion is defined as one thousand million. All references to years refer to the financial year ended 30 June. Any reference to a calendar year is prefaced by the word "calendar". Comprehensive additional information is available on our website: www.sasol.com 2
INTRODUCTION Bongani Nqwababa and Stephen Cornell Joint Presidents and Chief Executive Officers JSE: SOL NYSE: SSL
What you will hear today Key messages Strong results delivery and capital excellence focus despite continued market volatility Resilient operational and financial performance across our global business Improving focus on capital allocation to drive total shareholder return Lake Charles Chemicals Project (US) on track and delivering on key project milestones Mozambique Production Sharing Agreement (PSA) steady progress with drilling activities yielding positive results Secunda Chemicals Operations, South Africa Lake Charles Chemicals Project, Lake Charles, US 4
Strong results delivery and capital excellence focus despite continued market volatility Operating model continues to deliver further efficiencies and effectiveness Foundation businesses safe, highly efficient and driving continuous improvement Proactive financial risk mitigation measures to protect and grow balance sheet Current portfolio profitable through the cycle Developing future investment opportunities Lake Charles Chemicals Project, Lake Charles, US Wax Expansion Project, Sasolburg, South Africa 5
Resilient operational and financial performance across our global business Group safety performance, excluding illnesses, remained solid with an RCR of 0,27 Regrettably three tragic fatalities in HY17 Strong business performance across most of the value chain Secunda Synfuels Operations production volumes 1%, Eurasian operations 5% Normalised sales volumes 11% for Base Chemicals, 2% for Performance Chemicals and liquid fuels 2% Cash fixed costs 1% in real terms, despite impact of mining strike Cost and cash savings initiatives exceeding targets, developing further opportunities Headline EPS 38% to R15,12 per share, EPS 19% to R14,21 Interim dividend of R4,80 per share based on annual 2,8x cover/36% payout Sasol Mining, Secunda, South Africa Satellite Operations, Durban, South Africa 6
Improving focus on capital allocation to drive total shareholder return Long-term strategy being further refined Ensure robust capital allocation approach aimed at maximum sustainable returns to shareholders Focused interventions to close the current value gap Policy and structures in place to protect and strengthen the balance sheet Approach to be shared with investors in future engagements Lake Charles Chemicals Project, Lake Charles, US Sasol Synfuels, Secunda, South Africa 7
LCCP on track and delivering on key project milestones Overall project almost two thirds complete with engineering at 94% Procurement activities nearly completed Capital expenditure to date of US$6,0 billion tracking revised estimate Modularisation approach benefitting overall construction progress Above ground construction productivity tracking plan Good progress on operation and business readiness LCCP remains a sound investment that will return value to shareholders Confident that risks can be managed within current cost and schedule targets Lake Charles Chemicals Project, Lake Charles, US Lake Charles Chemicals Project, Lake Charles, US 8
Mozambique PSA steady progress with drilling activities yielding positive results Mozambique facing major fiscal challenges Working very closely with all our partners to support them Confident that the challenges will be overcome Mitigating actions in place to minimise impact on Sasol Investments secure and will deliver future value to shareholders and other stakeholders Positive results from four wells drilled Nine additional wells to be drilled by end of 2018 Loop Line 2 completed within schedule and significantly below budget Focus on securing gas feedstock to further enable our 2050 strategy Central Processing Facility, Temane, Mozambique Drilling rig, Temane, Mozambique 9
FINANCIAL AND OPERATIONAL PERFORMANCE Paul Victor Chief Financial Officer JSE: SOL NYSE: SSL
Key messages Volatile macro environment continues, current rand strength will negatively impact earnings Continued focus on factors within our control Operational stability and production volumes remain a key deliverable Cost and cash savings initiatives providing headroom Protection and strengthening of balance sheet continues, liquidity remains strong Driving value-based growth strategy through sound and transparent capital allocation principles Outlook for FY17 Sasolburg Operations, Sasolburg, South Africa ORYX GTL, Ras Laffan, Qatar 11
% change y-o-y US$/bbl $/mmbtu (gas price) US$1 = ZAR Macro environment remains challenging Chemical product prices trending up but exchange rate remains volatile Product price differentials under pressure Volatile currency R15,48 R14,71 R13,62 R13,99 $65 $47 $60 $48 R12,17 R13,74 $2,44 1H16 $2,95 1H17 1H16 1H17 Brent Product price Henry Hub Opening/closing rate Average rate during period Base chemical prices vs Brent 1H16 1H17 Solvents basket Polymers basket Brent 4% 2% (7%) US$/unit Product prices Average HY17 % vs HY16 Brent/bbl 47,68 2 Fuel products/bbl 60,36 8 Base Chemicals/ton 764 6 Performance Chemicals/ton 1 255 6 Export coal/ton 71 35 Prices reflect international commodities or baskets of commodities and are not necessarily Sasol specific Sources: RSA Department of Energy, ICIS-LOR, Reuters, Platts, International Energy Agency 12
Group profitability Solid operational performance supported by continued effective cost management HY17 HY16 % Mining 1 534 2 359 35 Exploration and Production International (EPI) 204 (8 289) >100 Performance Chemicals (PC) 4 647 5 161 10 Base Chemicals (BC) 1 733 3 178 45 Operating profit % 11 2 Energy 5 529 10 261 46 Group Functions 25 2 246 99 40 Operating profit (Rm) 13 672 14 916 8 34 Earnings per share (R) 14,21 11,97 19 Headline earnings per share (R) 15,12 24,28 38 Dividend per share (R) 4,80 5,70 16 Capital expenditure (Rbn) 30,2 33,6 10 13 Mining EPI PC BC Energy Group Strong business performance across most of the value chain despite macro challenges 13
Operating profit impacted by volatile macro environment Operating profit Headwinds HY16 14 916 Impact of stronger closing exchange rate Exchange rate Crude oil and product prices Once-off items and year-end adjustments (16%) 21% (15%) Macro environment Steep decline in product differentials and refining margins, trending upwards since November Lower average Base Chemicals margins, trending upwards since November Cost and other Sales volumes HY17 1% 1% 13 672 0 4 000 8 000 12 000 16 000 Rm Costs and volumes Tailwinds Resilient Performance Chemicals margins Cost and cash initiatives delivering Higher sales volumes Higher average oil prices since November 14
Cash fixed costs down 1% in real terms Cash fixed costs Tailwinds HY16 Sustainable business savings Cost increase below inflation Mining strike Normalised cost Cash cost 21 429 1,6% 1,1% (2,1%) 21 307 0,9% Costs and volumes Restructuring, study and growth cost Cost and value mindset culturally entrenched Increased BPEP and Response Plan savings delivering in excess of internal targets Maintaining focus and priority, developing further savings opportunities Headwinds Inflation Exchange rate (7,0%) (0,1%) Macro environment Strike action at Secunda mines HY17 22 628 0 5 000 10 000 15 000 20 000 25 000 Rm 15
Rand billion Targeting to deliver upper end of Response Plan range Response Plan cost savings to end FY18 (42 months) Margin and working capital Capital structuring Cash cost savings Capital portfolio reductions and phasing Rbn 0 5 10 15 20 25 30 35 Actual savings to date Minimum target Upper target Savings of R54,9 billion achieved since January 2015 FY17 target increased to R26,0 billion Additional opportunities continuously identified and implemented Sustainable savings target remains R2,5 billion by FY19 Business Performance Enhancement Programme 4,5 5,0 5,4 2,5 1,9 1,3 0,5 0,3 FY14 FY15 FY16 FY17 FY18 Project implementation cost Actual savings Annualised expected savings Delivered R4,9 billion in sustainable savings to date On track to deliver FY17 target of R5,0 billion Sustainable savings of R5,4 billion by end FY18 16
Operating profit/(loss) Rm Rm Rm mm tons mm tons R/ton Mining and EPI Operating Business Units 19,8 16,6 256 359 Mining Operating profit decreased by 35% 2,4 4,4 Export coal market prices higher Strike significantly impacted profitability Business ramp-up from January 2017 on target HY16 HY17 Production HY16 HY17 External purchases HY16 HY17 Unit cost/sales ton Impact of strike 988 437 HY16 HY17 Mozambique* (312) (7 769) HY16 HY17 Canada* (41) (512) HY16 HY17 Gabon* EPI Operating profit of R204 million delivered through focused management interventions Strong Mozambique operations, volumes up 3% Canadian asset de-risking yielding benefits Gabon loss lower due to lower depreciation and increased prices * Producing assets 17
kt % Rm kt % Rm Chemicals Strategic Business Units 1 702 1 727 15 5 161 14 4 647 HY16 HY17 HY16 HY17 HY16 HY17 Sales volumes Operating profit margin Operating profit Performance Chemicals Normalised sales volumes up 2% Operating profit down 10% to R4 647m R527m impairment in US Phenolics Significant decline in ammonia pricing Phase 2 of FTWEP expected to reach beneficial operation in March 2017 1 469 1 624 HY16 HY17 Sales volumes 19 10 HY16 HY17 Operating profit margin 3 178 1 733 HY16 HY17 Operating profit Base Chemicals Sales volumes increased by 11% Operating profit down 45% to R1 733m Strong closing R/US$ exchange rate results in ~R900 million loss US$ prices anticipated to recover during second half of FY17 18
% bscf % mmbbl mmbbl number Energy Strategic Business Unit 30,2 29,6 378 392 Energy Liquid fuels sales volumes 2% lower 17,1 15,8 Cash fixed costs down 2% Operating profit down 46% to R5 529 million HY16 HY17 Synfuels refined product HY16 HY17 Liquid fuels sales HY16 HY17 Retail centres Petrol differential 38% lower, diesel differential 12% lower Margins starting to recover 90 95 29,4 29,6 31 18 ORYX GTL achieves 95% utilisation Normalised profit from joint ventures 10% higher EGTL scheduled to ramp-up during first quarter of CY2017 HY16 HY17 ORYX utilisation HY16 HY17 Gas sales HY16 HY17 Operating profit margin 19
Driving disciplined and transparent capital allocation Sources of capital Cash flow from operations Maintain strong balance sheet and liquidity Allocation of capital Balance sheet protection will take precedence if investment grade credit rating at risk Focused value-based capital allocation Cash on hand Debt drawdown License to operate and sustenance capex Minimum shareholder return (2,8x cover/ 36% payout) Strengthen balance sheet Value-based growth capex Premium shareholder return* All three elements compete equally for capital Special dividends and share buy backs Equity raise Deliver maximum sustainable shareholder return Capital allocation guided by key financial metrics Gearing, Net debt:ebitda and ROIC * Up to 2,2x cover / 45% payout 20
Rand billion Capital spend forecast reduced due to stronger rand 80 60 70 Capital expenditure 75 66 60 60 FY17 Capital forecast impacted by: Stronger exchange rate Re-prioritised spend on LCCP without impacting schedule 40 20 0 FY16 FY17 FY18 Forecast based on ~R14,15/US$ (FY17) and ~R14,50/US$ (FY18) Capital estimates may change due to exchange rate volatility US$ capex $3,4bn (FY17) and $3,2bn (FY18) R1 change in exchange rate R3,4bn change on FY17 capex Committed to execution of dual regional strategy September 2016 forecast Sustenance Growth Revised forecast Sustenance Growth 21
Sufficient liquidity headroom available Opening cash balance (1 July 2016) Liquidity 52 Credit ratings confirmed at investment grade Moody s Baa2 (negative) S&P BBB (negative) Cash retained Dividend 12 6 Liquidity headroom to execute growth projects LCCP 2H17 spend forecast of US$1,7 billion Capex Closing cash balance (31 December 2016) Available undrawn facilities Total liquidity 28 30 66 94 Net debt to EBITDA increased to 1,1x expected to remain below 2x ceiling Commitment to dividend policy unchanged Cover range of 2,2x-2,8x of HEPS 0 20 40 60 80 100 Rbn 22
FY17 Outlook Outlook Mining EPI Energy Base Chemicals Performance Chemicals Group Return to full production with corresponding cost performance to follow inflation Increased gas production from PPA PSA drilling activities to continue No drilling activity in Canada Liquid fuels sales approximately 61 million barrels ORYX GTL average utilisation >90% Sales volumes 4-6% higher than prior year US$ selling prices recovering Gemini HDPE to reach mechanical completion by middle CY17 Sales volumes 1-2% higher than prior year Margins to remain resilient FTWEP phase 2 BO imminent, full benefit by FY19 Normalised cash fixed costs to track SA PPI RP cash flow contribution of R22-R26bn BPEP cost savings to achieve run-rate of R5,4bn by 2018 Balance sheet gearing between 30-35% 23
QUESTIONS AND ANSWERS Bongani Nqwababa and Stephen Cornell Joint Presidents and Chief Executive Officers JSE: SOL NYSE: SSL