We have seen a steady and continued recovery in global oil and product prices during the period under review. Normalised cash fixed costs continued to trend well within inflation for the period under review. HEPS was however negatively impacted by the following items:
- Although the average rand/US dollar exchange rate weakened by 3% to R13,99 during the period under review, the closing rand/US dollar exchange rate, however, strengthened to R13,74 at 31 December 2016 (30 June 2016 – R14,71) resulting in translation losses of approximately R1,3 billion on the valuation of the balance sheet compared to translation gains of R2,6 billion, which includes foreign exchange contracts, recognised in the prior period. The valuation impact of the stronger closing exchange rate for the period under review negatively impacted earnings by approximately R1,46 per share;
- The impact of labour actions at our Secunda mining operations, during the six month period, resulted in a 16% decrease in mining production volumes and significantly higher once-off costs to ensure a continuous supply of coal to our Secunda Synfuels Operations. The additional net cost associated with the labour action is estimated at approximately R1 billion or R1,06 per share; and
- Once-off items in the prior year of R2,3 billion or R3,77 per share relating mainly to the reversal of the Escravos GTL provision.
Our results for the first half of the 2017 financial year may be further affected by any adjustments resulting from our half year-end closure process. This may result in a change in the estimated earnings noted above. This trading statement only deals with the comparison to the first half of the 2016 financial year.
The financial information on which this trading statement is based has not been reviewed and reported on by the Company's external auditors. Sasol's financial results for the six months ended 31 December 2016 will be announced on Monday, 27 February 2017.
Sponsor: Deutsche Securities (SA) Proprietary Limited
Cavan Hill, Senior Vice President: Investor Relations
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SOURCE Sasol Limited