Sasol’s penalties for breaching competition laws since 2008 yesterday tallied R4.06-billion, not counting possible fines arising from unfinished competition probes, but chief executive Pat Davies said the producer of fuel and chemicals was “through the worst of it”.
“It would be nice to one day say that we’re completely through it,” he said, as Sasol announced a 21 percent jump in attributable earnings to R7.6bn for the six months to December, and promised shareholders a first-half dividend of R3.10 a share at a cost of R1.86bn.
Sasol initiated a global competition law compliance drive in 2008 after it was slapped with a fine of e318 million (R3.7bn at the time) by the European antitrust watchdog for anti-competitive behaviour by Sasol Wax in the European paraffin wax industry.
More aggressive probing of competition breaches by the South African authorities followed, leading to Sasol’s decision to co-operate with the authorities under their policy of corporate leniency.
It has since paid R250m to conclude charges involving Sasol Nitro and R112m regarding breaches by Sasol Polymers, which Sasol deems “technical in nature”.
The R112m penalty was reflected in yesterday’s results.
Davies said it remained focused on competition law compliance processes and systems.
“We have literally hundreds of lawyers involved worldwide… doing training, poring over contracts and generally increasing the awareness of all these matters, so that we never fall into this terrible episode of non-compliance again.”
The company yesterday pointed to higher oil and chemical prices having driven its buoyant start to financial 2011, although the strong rand last year put the brakes on its recovery from the economic slowdown.
“The business is in great shape,” Davies said, pointing to the opportunities provided by its recent acquisition of 50 percent of a Canadian shale gas field, which he said presented opportunities to take the Oryx gas-to-liquid model that Sasol pioneered in Qatar to North America and possibly Uzbekistan, where a feasibility study is under way.
The group has prioritised new natural gas opportunities over coal because of a structural shift in the price of oil and gas, but is nevertheless awaiting decisions on large coal-to-liquid opportunities in China and India.
Responding to reports that Sasol’s proposed $10bn (R67bn) coal-to-liquid plant in China had received environmental clearance, Davies said “a number of other boxes still have to be ticked”.
“It is very much in progress, and is going to take time.”
Sasol said its balance sheet remained strong, with the debt-to-equity ratio at a low 2.5 percent, which gave it flexibility to “consider a range of growth opportunities”. This ratio would remain at low levels in the short term, but would return to the targeted range of 20 percent to 40 percent in the medium term as Sasol’s large capital intensive projects and gas acquisition strategy gained momentum.
The shares rose 0.65 percent to R386.99 on the JSE yesterday. - Business Report