Dr Mandla SV Gantsho
2017 performance and shareholder distributions
Pursuing zero harm
Enhancing governance
Communicating on strategy
Increasing total shareholder return
Advancing transformation and diversity


Dear stakeholder,

The 2017 financial year was characterised by significant changes at a geopolitical level and across the global financial markets. Notwithstanding the turbulent times, Sasol reported a strong business performance across most of the value chain, and despite continued macro-economic and political volatility, Sasol’s core headline earnings increased by 6%.

The collapse of the oil price at the end of 2014 has, undoubtedly, changed the playing field. Our assessment, as articulated in early 2015, maintains that a lower-for-longer oil price environment is likely to remain the reality for the foreseeable future. To mitigate the effects of this, the Sasol management team, supported by the Board, initiated a lower-for-longer oil price Response Plan to proactively conserve cash. Commendable progress has been made in this regard, with total cash conserved at the end of the financial year of R69,4 billion. This brings us close to the upper end of our target range of R65 billion to R75 billion through to the end of the next financial year.

Furthermore, the management team’s foresight to sustainably reduce Sasol’s cost base and bring about a more competitive organisation, with the commencement of our Business Performance Enhancement Programme (BPEP) in 2012, has enabled us to operate profitably and generate healthy free cash flows from our core operations at oil prices of US$40 per barrel. This attests to the underlying resilience of our business and our determination to continue to provide shareholders with a world-class investment.

Owing to these measures, despite a tough macro-economic environment, Sasol’s balance sheet remains strong and has sufficient flexibility. This allows us to manage the company’s gearing and credit rating to ensure we maintain the strength of our balance sheet to fund our growth plans and deliver on our dividend policy.

2017 performance and shareholder distributions

Our 2017 performance is testament to the broader Sasol organisation rallying together to drive continued optimisation and efficiency of our operations. This past financial year, we set new production records in our operations in Secunda. We delivered a strong cash flow, prioritised capital spending and lower operating costs and significantly met our cost reduction target a year early.

Our large-scale, US-based Lake Charles Chemicals Project (LCCP) is progressing well according to the revised cost estimate. In parallel, our management team continues to review our group-wide assets to identify opportunities to further enhance performance.

Through the collective effort across the Sasol value chain, we maintained the total dividend at R12,60 per ordinary share through 2017 and the Board remains committed to grow sustainable free cash flow and distributions to our shareholders.

Sasol’s management team, ably led by Joint Presidents and Chief Executive Officers, Messrs Bongani Nqwababa and Stephen Cornell, is assiduously controlling both capital investment and operating expenses, while driving value-based growth in Southern Africa and North America.

Pursuing zero harm

I am, personally, deeply saddened to report that this year, five of our colleagues (four Sasol employees and one service provider) lost their lives in work-related incidents. I speak on behalf of the Board and the rest of the Sasol family in extending our deepest condolences to their families, friends and colleagues, and reaffirming Sasol’s unwavering commitment to achieving zero fatalities and injuries. In terms of each fatal incident, the Sasol team has undertaken comprehensive independent investigations, shared the lessons learnt across the Group, implemented appropriate remedial actions, and ensured that the affected families receive care and support.

Given the disappointing trend in fatalities this year, the Board has supported a safety initiative to focus on high-severity injuries associated with high risk tasks. More must be done to prevent the unnecessary and unacceptable loss of life and the Board and management are addressing this challenge with renewed rigour. The Board is confident that Sasol will reverse the fatality trend to align with the ever improving recordable injury trend, the best of which was recorded in 2017.

Enhancing governance

Our diverse Board enables an environment in which varied views and learnings can be exchanged as a result of the mix of skills, experience and backgrounds of the executive and non-executive directors interacting as a unitary working group.

Given the importance of the role each director plays, and taking into account factors such as scarce skills, gender diversity and global exposure, which may complicate finding and attracting suitably qualified individuals, the Board has devoted much time in evaluating and updating the succession plan of our directors, without having to wait for an impending vacancy.

The Board strives to ensure that Sasol is governed effectively, with integrity, and in accordance with sound corporate governance practices. Among significant corporate governance developments in the year, and taking into account emerging global trends and Sasol’s strategic direction, details of which are here, was the externally facilitated evaluation of the effectiveness and performance of the Board, its committees, individual directors and the chairman.

Taking into account various inputs, including the outcomes of the external assessment, the Board has restructured some of its committees, to ensure focused attention on:

Having assumed direct responsibility for the governance of risk, with the dissolution of the Risk and Safety, Health and Environment Committee, the Board will be evaluating the organisational top risks and how these serve to shape and influence Sasol’s longer-term strategy.

Communicating on strategy

In terms of the here and now, the Board remains committed to the near- to medium-term strategy that has defined Sasol’s activities over the past several years. This strategy has been characterised by a shift in focus from volume optimisation to value creation, driven by business excellence programmes, cost base restructuring and enhanced operational efficiencies.

With the scheduled start-up of the first units of the game-changing LCCP in the United States in calendar year 2018, the management team is working with the Board to identify Sasol’s growth drivers beyond 2020, which will be communicated during the Group’s capital markets day in November 2017.

Increasing total shareholder return

Looking at total return to shareholders, over the past few years Sasol’s share price has underperformed those of our peers. We believe this to be a reflection of the macro-economic volatility that has impacted our earnings and in some instances, poor capital projection execution, most notably of the LCCP.

To address this, the Board is overseeing the implementation of a number of measures including actively managing the balance sheet to address external volatility, focusing on continuous improvement and to work with governments and other stakeholders to manage the impact of regulations on our business. The Board is confident that these measures will assist in delivering superior returns to our shareholders. As such, in 2016, the Board constituted a dedicated committee, the Capital Investment Committee, to enhance its oversight on capital project execution and asset portfolio optimisation. Furthermore, the Board convened its June 2016 board meeting in Maputo, Mozambique, to engage directly with the government and other stakeholders in that country.

Advancing transformation and diversity

Diversity and inclusion at all levels of the business are essential to the sustainability of Sasol. In the year, the Board set a target of 30% representation of women directors by 30 June 2019. Calculated as a percentage of the directors, in 2017 this figure rose to 26,7% (from 21,4% in 2016) with the appointment of our newest Board members, Mss Trix Kennealy and Mpho Nkeli. With, respectively, exemplary track records in finance and human resources, we are delighted to have corporate leaders of their calibre on the Board.

Over many years, Sasol has worked to encourage transformation in its broadest sense, most especially in our home base of South Africa.

With the Sasol Inzalo Broad-Based Black Economic Empowerment (B-BBEE) transaction maturing in 2018, we are now investigating the merits of a new B-BBEE transaction with some of our South African-based wholly owned subsidiaries.


The Board and management team have set out Sasol’s strategic priorities leading up to the end of the decade.

Sasol is a global business operating in 33 countries. To do this effectively over the long term, we need the trust and confidence of our shareholders that we will continue to deliver value. Equally, we rely on the trust and support of the societies we work and operate in – both in South Africa and across the world.

In this, the Board considers the needs of all stakeholders to ensure value is shared appropriately. The Board provides leadership in supporting that Sasol acts ethically and with integrity at all times.

This report, together with our Sustainability Reporting and Annual Financial Statements, demonstrate the tenacity and devotion of Sasol people and the management teams who lead them. At Sasol, we know full well that our longevity is inextricably linked to the success of our many stakeholders – our employees, shareholders, customers, partners, suppliers, governments and communities. Despite the challenging and volatile backdrop, the Board and the management team remain steadfast in our commitment to our stakeholders. Thank you for your unfailing support.

Dr Mandla SV Gantsho

28 August 2017


Reporting legend

Integrated Report
Annual Financial Statements
Sustainability Reporting
Form 20-F