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JSE: SOL - SOLBE1 - Updated trading statement for the six months ended 31 December 2018

Publication Date: 
Friday, February 8, 2019

Updated trading statement for the six months ended 31 December 2018

Sasol Limited
(Incorporated in the Republic of South Africa)
(Registration number 1979/003231/06)
Sasol Ordinary Share codes: JSE : SOL NYSE : SSL
Sasol Ordinary ISIN codes: ZAE000006896 US8038663006
Sasol BEE Ordinary Share code: JSE: SOLBE1
Sasol BEE Ordinary ISIN code: ZAE000151817
(Sasol or the Company)

SASOL LIMITED – Updated trading statement for the six months ended 31 December 2018

Shareholders of Sasol are referred to the Company’s trading statement released on the Stock Exchange
News Service (SENS) on 21 November 2018 (Announcement), wherein the Company indicated that an
updated trading statement will be released on SENS in January 2019, once reasonable certainty is
attained with regards to the 31 December 2018 half-year financial results.

We have now reached a reasonable degree of certainty that the financial performance for the six months
ended 31 December 2018 (half year 2019) is expected to be within the updated earnings ranges
contained in the table below. Core headline earnings per share (Core HEPS) and earnings before
interest, tax, depreciation and amortisation (EBITDA) are within the previously provided range as
outlined in the Announcement. However, we are revising the range slightly upwards with regards to
earnings per share (EPS) and headline earnings per share (HEPS). The main reason for the increase
is the impact of half year-end valuation adjustments associated with crude oil hedges and closing
exchange rates. The updated ranges can be summarised as follows:

Estimated Actual Expected
Half year 2019 Half year 2018 % change
EPS R23,71 – R24,16 R11,29 110% – 114%
HEPS R22,97 – R23,68 R17,67 30% – 34%
Core HEPS R21,14 – R21,86 R18,22 16% – 20%
EBITDA R26 billion – R28 billion R24,2 billion 8% – 16%

Key macro-economic summary
Half year Half year %
2019 2018 change
Rand/US dollar average exchange rate 14,20 13,40 6
Rand/US dollar closing exchange rate 14,36 12,37 16
Average dated Brent crude oil price (US dollar / barrel) 71,33 56,74 26
Refining margins (US dollar / barrel) 9,49 9,73 (2)
Average Henry Hub gas price (US dollar / million British 3,36 2,93 15
thermal unit)

The increase/(decrease) from HEPS to Core HEPS is as follows:
Half year Half year
2019 2018
Rand per Rand per
share share
Translation impact of closing exchange rate (0,51) 1,33
Mark-to-market valuation of oil and foreign exchange hedges (0,48) (0,78)
Implementation of Khanyisa B-BBEE transaction 0,63 -
Reversal of provision for tax litigation matters (1,60) -
Lake Charles Chemicals Project (LCCP) depreciation (post Beneficial 0,17 -
Operation ramp-up)

The normalised cash fixed cost for the period under review has been contained to below our 6% inflation
target despite operational challenges experienced during the period.
LCCP update
As at the end of December 2018, engineering and procurement activities were substantially complete
and construction progress was at 84%. Our overall project completion was 94% and capital expenditure
amounted to US$10,9 billion.

The first derivative unit, linear low-density polyethylene (LLDPE), produced first product in January 2019
and beneficial operation is expected in February, approximately two months behind schedule. Utilities
to support the early process units were fully operational by end November 2018. These utilities together
with LLDPE will comprise ~40% of the LCCP existing total cost.

Unfortunately, during the last quarter of CY2018, several factors within and beyond our control impacted
the completion schedule and associated cost for the remaining units resulting in the overall project
capital cost estimate being revised from US$11,13 billion to a range of US$11,6 – 11,8 billion. The
difference between the upper end and lower end of the range represents a contingency and weather
provision of US$200 million.

These factors which impacted the revised cost estimate include:

? Changes to scope
o Late scope additions for the Cracker as a result of incomplete engineering work not
timeously identified;
o Increased scope to ensure process safety for the Cracker and Ethylene oxide / Ethylene
Glycol (EO/EG) unit due to defective carbon steel forgings. The impact was fully assessed
late in Q4 CY2018 leading to a one month delay;
? A cumulative month of work being lost as a result of excessive rainfall in Q4 CY2018;
? Productivity losses exacerbated by high absenteeism around public holidays and construction
rework since end November 2018; and
? Schedule delays of the remaining units will result in additional overhead costs.

While our underlying productivity factor remained on track, the inclement weather, scope additions and
absenteeism had a significant impact on actual productivity. These factors were assessed and
quantified late in Q4 CY2018 and where feasible, management interventions were put in place to arrest
the controllable trends. Unfortunately, the mitigating actions were not successful in reversing the full
impact on schedule and cost.

The beneficial operation dates for the individual units have been revised as follows:

Previous Updated Approximate
Guidance Guidance delay

Linear low-density polyethylene (LLDPE) December 2018 February 2019 2 months
Ethylene Oxide / Ethylene Glycol (EO/EG) February 2019 June 2019 4 months
Cracker February 2019 July 2019 5 months
Low density polyethylene (LDPE) March 2019 August 2019 5 months
Ziegler H2CY19 November 2019 -
Ethoxylate (ETO) H2CY19 December 2019 -
Guerbet H2CY19 January 2020 1 month

Management maintains our unrelenting focus on delivering the remaining units per this updated plan
and we remain confident that the fundamentals for the LCCP - being, among others, a feedstock
advantaged plant, a world scale highly integrated facility, diverse product slate with high margin
products and world class logistics and infrastructure - remain intact.
As a result of the delays highlighted above, we are revising our LCCP EBITDA estimate down from
US$110 – US$160 million to an EBITDA loss of US$165 – US$195 million for FY19. However, we
maintain our guidance that LCCP will deliver a steady state EBITDA of US$1,3 billion in FY2022.

More details on the project can be found in our updated project factsheet at
<Origin Href="Link">https://www.sasol.com/investor-centre/lake-charles-chemicals-project/lak...

The financial information on which this trading statement is based has not been reviewed and reported
on by the Company’s external auditors. Sasol will release its reviewed results for the six months ended
31 December 2018 on Monday, 25 February 2019.

A detailed summary of the production and sales metrics for the financial half year for all our businesses
is available on our website, <Origin Href="Link">www.sasol.com

8 February 2019

Merrill Lynch South Africa (Pty) Ltd

* EBITDA is calculated by adjusting operating profit for depreciation, amortisation, remeasurement
items, share-based payments and unrealised gains and losses on our hedging activities.
** Core HEPS are calculated by adjusting headline earnings with once-off items, period close
adjustments and depreciation and amortisation of capital projects, exceeding R4 billion which have
reached beneficial operation and are still ramping up and share-based payments on implementation of
B-BBEE transactions. Period close adjustments in relation to the valuation of our derivatives at period
end are to remove volatility from earnings as these instruments are valued using forward curves and
other market factors at the reporting date and could vary from period to period. We believe core headline
earnings are a useful measure of the group´s sustainable operating performance. However, this is not
a defined term under IFRS and may not be comparable with similarly titled measures reported by other
companies. The aforementioned adjustments are the responsibility of the directors of Sasol. The
adjustments have been prepared for illustrative purposes only and due to their nature, may not fairly
present Sasol´s financial position, changes in equity, results of operations or cash flows.

Date: 08/02/2019 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (JSE).
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