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African Petrochemicals Nov/Dec Edition 14.6 {2017}


ENTREPRENEURS KEY TO ADDRESSING SOUTH AFRICA’S DESPERATE JOBS CRISIS SASOL SIGNS US,9 BILLION FIVE-YEAR REVOLVING CREDIT FACILITY South Africans must embrace the entrepreneurial culture because the old days of jobs waiting for them after graduation are long gone. The country’s economic future depends instead on the quality of its entrepreneurs, in whose hands most future jobs – and income generation – will lie. That was the warning sounded by Unathi Njokweni-Magida, Engen’s head of Transformation and Stakeholder Engagement, as the company prepares to host the 2017 finals of its acclaimed Pitch & Polish initiative. A passionate Njokweni-Magida said the programme, of which Engen has been the title sponsor for the past six years, has already helped approximately 10 000 South Africans realise their entrepreneurial ambitions. “Many of these people have been running small businesses for years, with no idea of how to grow them further. Others have great ideas but lack the confidence and the business savvy necessary to present them to the banks or possible investors and persuade someone to back them financially. “This is where Pitch & Polish steps in, running nine workshops across the country annually to teach them what they need to know,” she explains. Although Engen awards life-changing prizes to the entrepreneurs placed in the top three each year, thousands of other participants also benefit from the expert presentations. “It’s an amazing learning experience for everyone who attends, and their many success stories are proof they leave with a new mindset, a new vision for their businesses, and the advice necessary to help turn their plans into reality,” says Njokweni- Magida. While Engen Pitch & Polish is a B.E.E. initiative in the company’s Enterprise Development portfolio, she is adamant its involvement is no political marketing ploy, but Engen’s contribution to making a difference to the communities where it does its business. Unathi Magida-Njokweni, Engen’s head of Transformation and Stakeholder Engagement “Poverty and unemployment is rife in South Africa. With unemployment at 37%, the government and private sector cannot provide much needed employment solutions. Corporates must step up and do the right thing.” While Engen isn’t naïve about how the company also benefits in this “ecosystem of progress”, it is the stories of businesses that started with two staff members and now employ 300 that really drive their continued involvement, adds Njokweni-Magida. “We focus not only on training during our workshops, but also provide participants with materials and networks that they can use once they leave us. They also get the kind of exposure they’d never normally get and we’ve even seen some of the Engen Pitch & Polish beneficiaries invited to international events as a result.” Pitch & Polish, she stressed, is Engen’s contribution to helping alleviate poverty and creating much-needed jobs. “If we can do that, then we are able to assist communities to function properly. If we don’t, then our rising poverty statistics will tell the story of how we failed to rise to the challenge,” cautions Njokweni-Magida. The semi-finals of Engen Pitch & Polish 2017 are scheduled for November 23, and the finals for November 30, both in Johannesburg. Sasol, the South African chemicals and energy company, has increased its existing US,5 billion Revolving Credit Facility (“the Facility”) to US,9 billion and extended the maturity to five years with the inclusion of two further extension options of one year each. Sasol launched this transaction with a targeted facility size of US,0 billion, which was subsequently increased to US,9 billion given the notable oversubscription. Citi and Mizuho Bank, Ltd. were mandated as Joint Global Co-ordinators for the transaction, which launched in early November 2017 to a targeted group of banks. The Joint Global Co-ordinators each pre-committed to the transaction and invited banks to commit at one of three ticket levels with the following titles: Bookrunner and Mandated Lead Arranger (BMLA), Mandated Lead Arranger (MLA) and Lead Arranger. The Company also accommodated a limited number of smaller tickets with the Arranger title. Syndication closed oversubscribed with17 banks committing, allowing Sasol to increase the Facility and offer scale back to the Joint Global Co-ordinators, BMLAs and the MLAs. Along with the Joint Global Co-ordinators, there were eight other BMLAs: ABN AMRO Bank N.V., Bank of America Merrill Lynch, BNP Paribas S.A. South Africa Branch, Intesa Sanpaolo Bank Luxembourg S.A.., J.P. Morgan Securities plc., The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking Corporation Europe Limited and UniCredit Bank Austria. Barclays Bank PLC, Deutsche Bank and HSBC joined as MLAs, Export Development Canada and Standard Chartered Bank joined as Lead Arrangers and Wells Fargo Bank N.A. London Branch and Société Générale joined as Arrangers. EY acted as Independent Financial Advisor to Sasol in respect of the transaction. 21

SASOL UNVEILS STRATEGY TO DRIVE FUTURE VALUE-BASED GROWTH Capital Markets Day 2017, Johannesburg, South Africa Sasol unveiled its refined corporate strategy, which sets a clear path for sustainable growth and accelerated shareholder returns. Joint President and Chief Executive Officer (CEO), Stephen Cornell says: “In developing our strategy, we considered both the opportunities and risks we face, informed by developments in the external environment. It is clear that megatrends influential to our business will result in greater demand for chemicals and energy products in key markets we serve.” Key megatrends and assumptions informing Sasol’s strategic choices are global population growth and further urbanisation, the move to even greater efficiency and performance, in all aspects of business, supported by digitalisation and sustained volatility in both oil prices and exchange rates. “Against this backdrop, our value-based growth strategy is premised on further enhancing our foundation businesses, leveraging our core strengths in specialty chemicals, exploration and production (E&P) and retail fuels, underpinned by increased discipline in capital allocation,” says Cornell. Sasol’s foundation businesses, which are already cash positive at a US per barrel oil price, provide a robust platform for long-term growth and delivery of ongoing value to shareholders. 22 Joint President and CEO, Bongani Nqwababa says: “Our delivery track record – evidenced in recent years by significant volume improvements at key facilities, our competitive cost position and global portfolio of highly cash-generative, diversified assets – places us in a strong position to realise greater value from our foundation businesses. Here, operational excellence, continuous improvement and digitalisation programmes, as well as rigorous asset reviews, will enable us to become a more resilient, efficient and effective organisation.” To date, Sasol has completed reviews on more than half of its global assets, underpinned by the company’s drive to improve asset performance, not liquidity requirements. Thus far, the reviews have confirmed that the majority of the company’s assets will be retained and clear improvement actions have been defined for each. The reviews conducted to date did, however, identify the Canadian shale gas asset as being non-core. In this respect, Sasol will commence a structured divestment process involving Progress Energy, the partner in this asset. With reference to the clear choices made to drive value-based growth, in Sasol’s Chemicals Business the company will progressively grow its portfolio of high-value specialty chemicals in attractive growth sectors. “Our existing application know-how and strong product portfolio in a broad range of specialty chemical products, gives us confidence we can deliver in this area,” says Cornell. “Our push into specialty chemicals is further supported by the benefit of the scale and cost advantage we enjoy through our investments in commodity chemicals in South Africa and North America. We will take full advantage of these large, cost competitive facilities to grow our specialty chemicals portfolio.” On the upstream front, the company will pursue progressive, disciplined growth in E&P both in Mozambique and in selected countries in West Africa, to expand production levels with a bias to liquid plays. “To win on the African continent, we will leverage our current upstream expertise, while continuing to strengthen our E&P capabilities given the larger role we envisage for Sasol Exploration and Production International going forward,” says Nqwababa. Regarding Sasol’s Energy Business, Nqwababa adds: “To ensure we drive more of our own liquid fuel production through Sasol’s retail network, where we enjoy higher margins, we will continue to aggressively grow our liquid fuels retail footprint in Southern Africa. We will capitalise on our strong brand and existing cost advantage to achieve our retail fuels growth aspirations.” On Sasol’s financial framework, Paul Victor, Chief Financial Officer says: “We will apply increased discipline in our capital allocation approach, focused on delivering improved cash flow generation through the cycle, adopting a balanced approach to shareholder returns and a capital structure that is fit for the future.” Translating Sasol’s strategy into measurable value for shareholders will comprise two distinct phases. “From now until 2022, Sasol will focus on delivery of the Lake Charles Chemicals Project (LCCP) in the US and the Production Sharing Agreement in Mozambique, while extracting further value from our existing portfolio of diversified assets. In this period we are targeting an improvement in return on invested capital (ROIC) of at least 2% on our financial year 2017 base. This will be achieved through continuous improvement that will encompass various initiatives across our value chain,” says Victor. He adds that successful delivery of these initiatives will drive earnings growth and greater efficiency and effectiveness, which in turn, support the earlier delivery of returns to shareholders through an increase in Sasol’s dividend payout to 40% or 2,5 times cover by 2022. “Beyond 2022, we will focus on building an investment portfolio of smaller to medium-sized organic and inorganic opportunities, in the


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